APPRAISAL OF REAL PROPERTY

Block 8 Vacant Land Full block bounded by SW Farmington Road on the north; Main and Angel on the west and east, respectively; and, SW First Avenue on the south. Beaverton, Washington County, Oregon 97005 Client Requisition No.: 2013707987898485

PREPARED FOR: Liz Jones City of Beaverton 4755 SW Griffith Drive Beaverton, OR 97005

EFFECTIVE DATE OF THE APPRAISAL: November 5, 2012

REPORT FORMAT: Summary

IRR - PORTLAND File Number: 134-2012-0360 Block 8 Full block bounded by SW Farmington Road on the north; Main and Angel on the west and east, respectively; and, SW First Avenue on the south. Beaverton, Oregon December 3, 2012

Liz Jones City of Beaverton 4755 SW Griffith Drive Beaverton, OR 97005

SUBJECT: Market Value Appraisal Block 8 Full block bounded by SW Farmington Road on the north; Main and Angel on the west and east, respectively; and, SW First Avenue on the south. Beaverton, Washington County, Oregon 97005 Client Requisition No.: 2013707987898485 Integra Portland File No. 134-2012-0360

Dear Ms. Jones:

Integra Realty Resources – Portland is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of the fee simple fee and retrospective leased fee and leasehold interests in the property. The client for the assignment is City of Beaverton, and the intended use is for asset valuation purposes.

The appraisal is intended to conform with the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute, and applicable state appraisal regulations. The appraisal is also prepared in accordance with the appraisal regulations issued in connection with the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

To report the assignments results, we use the summary report option of Standards Rule 2-2 of USPAP. Accordingly, this report contains summary discussions of the data, reasoning, and analyses that are used in the appraisal process whereas supporting documentation is retained in our file. The depth of discussion contained in this report is specific to the needs of the client and the intended use of the appraisal.

The subject is a parcel of vacant land containing an area of 0.90 acres or 39,204 square feet. The property is zoned RC-OT, Regional Center-Old Town District, which permits a broad range of commercial and residential uses in the central old town core area of Beaverton.. Liz Jones City of Beaverton December 3, 2012 Page 2

Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value is as follows:

VALUE CONCLUSIONS Appraisal Premise Interest Appraised Date of Value Value Conclusion M arket Value Fee Simple November 5, 2012 $860,000 M arket Value Leased Fee M arch 23, 2012 $11,000 M arket Value Leasehold M arch 23, 2012 $849,000

If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service.

Respectfully submitted,

INTEGRA REALTY RESOURCES -PORTLAND

Donald L. Singer, MAI, CRE, FRICS Certified General Real Estate Appraiser OR Certificate # C000055 Ext 09/30/14 Telephone: 503.478.1005 Email: [email protected] BLOCK 8 TABLE OF CONTENTS

TABLE OF CONTENTS

SUMMARY OF SALIENT FACTS AND CONCLUSIONS ...... 1 Identification of Subject ...... 2 Current Ownership and Sales History...... 2 Type of Value, Property Rights and Effective Date ...... 2 Definition of Market Value ...... 2 Definition of Property Rights Appraised ...... 3 Client, Intended User and Intended Use ...... 3 Applicable Requirements ...... 3 Prior Services ...... 4 Scope of Work ...... 4 ECONOMIC ANALYSIS ...... 6 Portland MSA Area Analysis...... 6 Office Market Analysis ...... 17 Retail Market Analysis ...... 24 Multifamily Market Analysis ...... 33 PROPERTY ANALYSIS ...... 43 Land Description and Analysis ...... 43 Real Estate Tax Analysis ...... 47 Highest and Best Use Analysis ...... 48 VALUATION ANALYSIS ...... 50 Valuation Methodology ...... 50 Sales Comparison Approach ...... 51 Reconciliation and Conclusion of Value ...... 58 CERTIFICATION ...... 62 ASSUMPTIONS AND LIMITING CONDITIONS ...... 64 ADDENDA A. Appraiser Qualifications

©2012 BY INTEGRA REALTY RESOURCES BLOCK 8 SUMMARY OF SALIENT FACTS AND CONCLUSIONS

SUMMARY OF SALIENT FACTS AND CONCLUSIONS

Property Name Block 8 Address Full block bounded by SW Farmington Road on the north; Main and Angel on the west and east, respectively; and, SW First Avenue on the south. Beaverton, Oregon 97005 Property Type Land Owner of Record City of Beaverton Tax ID R125377, R125386, R125395, R125402, R125411, and R125420 Land Area 0.90 acres; 39,204 SF Zoning Designation RC-OT, Regional Center-Old Town District Highest and Best Use Office, retail, or multifamily residential use, or a combination thereof. Exposure Time; Marketing Period <=12 months; <=12 months Date of the Report January 0, 1900 (To be filled in) Sales Comparison Approach Number of Sales 7 Range of Sale Dates Jul 10 to Oct 12 Range of Prices per SF (Unadjusted) $14.97 - $45.03 VALUE CONCLUSIONS Value Appraisal Premise Interest Appraised Date of Value Conclusion Market Value Fee Simple November 5, 2012 $860,000 Market Value Leased Fee March 23, 2012 $11,000 Market Value Leasehold March 23, 2012 $849,000 The values reported above are subject to the definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than City of Beaverton may use or rely on the information, opinions, and conclusions contained in the report. The summary shown above is for the convenience of City of Beaverton, and therefore it is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein.

PAGE 1 BLOCK 8 GENERAL INFORMATION

IDENTIFICATION OF SUBJECT The subject is a parcel of vacant land containing an area of 0.90 acres or 39,204 square feet. The property is zoned RC-OT, Regional Center-Old Town District, which permits a broad range of commercial and residential uses in the central old town core area of Beaverton..

PROPERTY IDENTIFICATION Property Name Block 8 Address Full block bounded by SW Farmington Road on the north; Main and Angel on the west and east, respectively; and, SW First Avenue on the south. Beaverton, Oregon 97005 Tax ID R125377, R125386, R125395, R125402, R125411, and R125420 Le ga l D e sc ription R C -O T Census Tract Number 311

CURRENT OWNERSHIP AND SALES HISTORY The owner of record is the City of Beaverton . The City acquired the property in various transactions between 1999 and 2004, totaling $806,000, or $22.68 per square foot of site area (39,204 square feet). Since the time of acquisition, the improvements that were on the site (several houses) were removed at an unknown cost.

To the best of our knowledge, no other sale or transfer of ownership has occurred within the past three years.

TYPE OF VALUE,PROPERTY RIGHTS AND EFFECTIVE DATE The purpose of the appraisal is to develop an opinion of the market value of the fee simple and retrospective leased fee and leasehold interest in the property as of the effective date of the appraisal, November 5, 2012. The date of the report is . The appraisal is valid only as of the stated effective date or dates.

DEFINITION OF MARKET VALUE Market value is defined as:

“The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

ƒ Buyer and seller are typically motivated; ƒ Both parties are well informed or well advised, and acting in what they consider their own best interests;

PAGE 2 BLOCK 8 GENERAL INFORMATION ƒ A reasonable time is allowed for exposure in the open market; ƒ Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and ƒ The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.” (Source: Code of Federal Regulations, Title 12, Chapter I, Part 34.42[g])

DEFINITION OF PROPERTY RIGHTS APPRAISED Fee simple estate is defined as, “Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”

Leased fee interest is defined as, “A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a contractual landlord-tenant relationship (i.e, a lease).”

Leasehold interest is defined as, “The tenant’s possessory interest created by a lease.”

Lease is defined as: “A contract in which rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for a specified rent.”

(Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010)

CLIENT,INTENDED USER AND INTENDED USE The client and intended users are the City of Beaverton. The intended use is for asset valuation purposes. The appraisal is not intended for any other use or user. No party or parties other than City of Beaverton may use or rely on the information, opinions, and conclusions contained in this report.

APPLICABLE REQUIREMENTS This appraisal is intended to conform to the requirements of the following:

ƒ Uniform Standards of Professional Appraisal Practice (USPAP); ƒ Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; ƒ Applicable state appraisal regulations; ƒ Appraisal requirements of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), revised June 7, 1994;

PAGE 3 BLOCK 8 GENERAL INFORMATION

PRIOR SERVICES USPAP requires appraisers to disclose to the client any services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have performed no other services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment.

SCOPE OF WORK To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below.

VALUATION METHODOLOGY Appraisers usually consider the use of three approaches to value when developing a market value opinion for real property. These are the cost approach, sales comparison approach, and income capitalization approach. Use of the approaches in this assignment is summarized as follows:

APPROACHES TO VALUE Approach Applicability to Subject Use in Assignment Cos t A pproach Not A pplicable Not Utilized Sales Comparis on A pproach A pplicable Utilized Income Capitalization A pproach Not A pplicable Not Utilized

We use only the sales comparison approach in developing an opinion of value for the fee simple interest. This approach is applicable to the subject because there is an active market for similar properties, and sufficient sales data is available for analysis.

The income approach is used to estimate the value of the leased fee interest.

The cost approach is not applicable because there are no improvements that contribute value to the property.

DATA RESEARCH AND ANALYSIS All comparable data was confirmed by a buyer/buyer’s representative, seller/seller’s representative, or broker involved in the transaction. The original source of the comparable sales information was either: CoStar, RMLS, Metroscan, LoopNet, public records, broker leads, other appraisal firms, or in-house data files. Additional steps taken to gather, confirm, and analyze relevant data, are detailed in individual sections of the report.

PROPERTY INSPECTION Donald L. Singer, MAI, CRE, FRICS conducted an on-site inspection of the property on November 5, 2012.

PAGE 4 BLOCK 8 GENERAL INFORMATION Donald L. Singer, MAI, CRE, FRICS made inspection of all of the sale comparables that are used in this report.

REPORT FORMAT The report has been prepared under the summary report option of Standards Rule 2-2(b) of USPAP. As such, it contains summary discussions of the data, reasoning, and analyses that are used in the appraisal process whereas supporting documentation is retained in our file. The depth of discussion contained in this report is specific to the needs of the client and the intended use of the appraisal.

PAGE 5 BLOCK 8 PORTLAND MSA AREA ANALYSIS

ECONOMIC ANALYSIS

PORTLAND MSA AREA ANALYSIS The subject is located in the Portland-Vancouver-Beaverton, OR-WA Metropolitan Statistical Area, hereinafter called the Portland MSA, as defined by the U.S. Office of Management and Budget. The Portland MSA is 6,684 square miles in size, and is the 23rd most populous metropolitan area in the nation. The U.S. Census Bureau's definition for the MSA is currently all of the following counties: Clackamas County, Oregon; Columbia County, Oregon; Multnomah County, Oregon; Washington County, Oregon; Yamhill County, Oregon; Clark County, Washington; and Skamania County, Washington. The Washington counties are separated from Oregon by the Columbia River. The City of Portland in located at the confluence of the Columbia and Willamette Rivers, approximately 100 miles inland from the Pacific Ocean and 180 miles south of Seattle Washington.

POPULATION The Portland MSA has an estimated 2012 population of 2,273,679, which represents an average annual 1.4% increase over the 2000 census of 1,927,881. The Portland MSA added an average of 28,817 residents per year over the 2000-2012 period, and its annual growth rate exceeded the State of Oregon rate of 1.1%.

POPULATION TRENDS Population Compound Ann. % Chng 2000 Census 2012 Est. 2017 Est. 2000 - 2012 2012 - 2017 Portland-Vancouver et al, OR-WA 1,927,881 2,273,679 2,405,701 1.4% 1.1% Oregon 3,421,399 3,898,000 4,084,026 1.1% 0.9% Source: Claritas

Looking forward, the Portland MSA's population is projected to increase at a 1.1% annual rate from 2012-2017, equivalent to the addition of an average of 26,404 residents per year. The Portland MSA's growth rate is expected to exceed that of Oregon, which is projected to be 0.9%.

EMPLOYMENT Total employment in the Portland MSA is currently estimated at 998,100 jobs. Between year end 2001 and the present, employment rose by 41,600 jobs, equivalent to a 4.3% increase over the entire period. There were gains in employment in six out of the past ten years despite two national economic downturns during this time. Job growth in the Portland MSA turned positive in 2010 and remained so in 2011.

As of August 2012 (most recent figures available), the Portland MSA non-seasonally adjusted unemployment rate was 8.1%; down significantly from 9.3% in August 2011 and down slightly form 8.3% in July 20121. The local area rate is lower in comparison to an 8.7% rate for the State of Oregon. However, the rate for the entire State of Oregon has declined from 9.6% in June 2011.

1 http://olmis.emp.state.or.us/olmisj/AllRates

PAGE 6 BLOCK 8 PORTLAND MSA AREA ANALYSIS The Portland MSA's rate of employment growth over the last decade surpassed that of Oregon, which experienced an increase in employment of 2.0% or 31,300 jobs over this period. Trends in employment are a key indicator of economic health and strongly correlate with real estate demand.

EMPLOYMENT TRENDS Total Employment (Year End) Unemployment Rate (Ann. Avg.) % % Year Portland MSA Change Oregon Change Portland MSA Oregon 2001 956,500 1,596,300 6.0% 6.4% 2002 948,300 -0.9% 1,595,200 -0.1% 7.8% 7.6% 2003 947,100 -0.1% 1,595,500 0.0% 8.3% 8.1% 2004 978,200 3.3% 1,644,500 3.1% 7.0% 7.3% 2005 1,012,100 3.5% 1,694,700 3.1% 5.8% 6.2% 2006 1,037,600 2.5% 1,734,400 2.3% 5.0% 5.3% 2007 1,051,400 1.3% 1,751,700 1.0% 4.8% 5.2% 2008 1,018,200 -3.2% 1,684,500 -3.8% 5.9% 6.5% 2009 969,100 -4.8% 1,603,800 -4.8% 10.8% 11.1% 2010 986,600 1.8% 1,621,200 1.1% 10.6% 10.7% 2011 998,100 1.2% 1,627,600 0.4% 9.1% 9.5% Overall Change 2001-2011 41,600 4.3% 31,300 2.0% Avg Unemp. Rate 2001-2011 7.4% 7.6% Unemployment Rate - August 2012 8.1% 8.7% Source: Bureau of Labor Statistics and Economy.com. Employment figures are from the Current Employment Survey (CES). Unemployment rates are from the Current Pop ulation Survey (CPS). The figures are not seasonally adjusted.

Unemployment rate trends are another way of gauging an area’s economic health. Over the past decade, the Portland MSA unemployment rate has been generally lower than that of Oregon, with an average unemployment rate of 7.4% in comparison to a 7.6% rate for Oregon. This is another indication of the strength of the Portland MSA economy over the longer term.

At the current time, the Portland MSA unemployment rate is 8.1% in comparison to a 8.7% rate for Oregon, a positive sign that is consistent with the fact that the Portland MSA has outperformed Oregon in the rate of job growth in 2010 and 2011.

Major employers in the Portland MSA are shown in the table below.

MAJOR EMPLOYERS Portland-Vancouver et al, OR-WA Name Number of Employees 1 State of Oregon 18,400 2 Intel Corp. 15,636 3 Providence Health System 14,089 4 U.S. Federal Government 13,900 5 Oregon Health & Science University 13,636 6 Fred Meyer Stores 9,858 7 Legacy Health System 9,732 8 Kaiser Foundation 9,039 9 City of Portland 8,876 10 Nike, Inc. 7,000 Source: Portland Business Journal, M ay 2011

PAGE 7 BLOCK 8 PORTLAND MSA AREA ANALYSIS

GROSS DOMESTIC PRODUCT The Portland MSA is the 20th largest metropolitan area economy in the nation based on Gross Domestic Product (GDP).

Economic growth, as measured by annual changes in GDP, has been considerably higher in the Portland MSA than Oregon overall during the past eight years. The Portland MSA has grown at a 5.1% average annual rate while Oregon has grown at a 3.7% rate. As the national economy recovers from the downturn of 2008-2009, the Portland MSA continues to perform better than Oregon. The Portland MSA's GDP rose by 4.7% in 2010 while Oregon's GDP rose by 3.4%.

The Portland MSA has a per capita GDP of $53,587, which is 23% greater than Oregon's GDP of $43,430. This means that Portland MSA industries and employers are adding relatively more value to the economy than their counterparts in Oregon.

GROSS DOMESTIC PRODUCT ($ M il) % ($ M il) % Year Portland MSA Change Oregon Change 2003 85,714 129,218 2004 94,102 9.8% 139,601 8.0% 2005 97,683 3.8% 143,349 2.7% 2006 109,621 12.2% 157,707 10.0% 2007 114,726 4.7% 162,747 3.2% 2008 121,895 6.2% 169,559 4.2% 2009 116,182 -4.7% 161,191 -4.9% 2010 121,680 4.7% 166,725 3.4% Compound % Chg (2003-2010) 5.1% 3.7% GDP Per Capita 2010 $53,587 $43,430 Source: Bureau of Economic Analysis and Economy.com; data released September 2011.

Gross Domestic Product is a measure of economic activity based on the total value of goods and services produced in a specific geographic area. The figures in the table above represent inflation adjusted “real” GDP stated in 2005 dollars.

INCOME,EDUCATION AND AGE The Portland MSA is more affluent than Oregon. Median household income for the Portland MSA is $55,354, which is 16.2% greater than the corresponding figure for Oregon.

MEDIAN HOUSEHOLD INCOME - 2012 Portland-Vancouver et al, OR-WA $55,354 Oregon $47,656 Comparison of Portland-Vancouver et al, OR-WA to Oreg + 16.2% Source: Claritas

Residents of the Portland MSA have a higher level of educational attainment than those of Oregon. An estimated 34% of Portland MSA residents are college graduates with four year

PAGE 8 BLOCK 8 PORTLAND MSA AREA ANALYSIS degrees, versus 29% of Oregon residents. People in the Portland MSA are slightly younger than their Oregon counterparts. The median age for the Portland MSA is 38 years, while the median age for Oregon is 39 years.

EDUCATION AND AGE - 2012

Percent College Graduate Median Age

80% 50 39 70% 45 38 60% 40 35 50% 34% 30 40% 29% 25 30% 20 20% 15 10% 10 Portland-Vancouver Oregon Portland-Vancouver Oregon et al, OR-WA et al, OR-WA Source: Claritas

LAND USE With the passage of Senate Bill 100 in 1973, the Oregon legislature established the Land Conservation and Development Commission (LCDC) and charged them with establishing a series of goals for state-wide land use. Under Goal 14, Urbanization, the LCDC instituted the concept of the Urban Growth Boundary (UGB) for all Oregon cities. The UGB for the Portland region (excluding Clark and Skamania Counties), as set forth by the Metro regional government, was approved by the LCDC in 1980.2

The goal of the boundary is to control sprawling development by encouraging efficient use of urban land. The UGB promotes infill development and higher density, while preserving farm and forest lands outside the boundary. Every five years, the Metro government is required to conduct a land supply analysis to determine if there is sufficient inventory within the UGB to represent a 20-year supply for housing and economic development. The “location factors” used to determine setting or adjusting the boundary includes the efficient use of land, the protection of agricultural land at the city edge, and the provision of cost-effective public services.

The UGB grew in small increments until 1998, when about 3,500 total acres were added to several outlying areas. By 2000, there were about 1.3 million people living within the UGB’s 236,000 acres. Metro approved another expansion to the UGB in December 2002, encompassing 18,638 acres. Most of this land was added for a projected 38,657 housing units with schools and parks, while 2,671 acres were set aside specifically for job development. The most recent expansion was in June 2004, when the boundary was modified to include an additional 1,940 acres needed to satisfy growing industrial demand in the region. Metro was able to lower the required additional acreage by including land already inside the UGB but not yet zoned as industrial, and by recalculating the efficiency with which land inside the

2 Metro Council < www.metro-region.org/article.cfm?articleID=277 >

PAGE 9 BLOCK 8 PORTLAND MSA AREA ANALYSIS boundary is redeveloped for industrial use.3 The addition to the UGB was lauded by many who felt that further expansion assists in job creation and boosts the local economy.

The Metro UGB expansion process was scheduled to begin again in 2007, but the Oregon Legislature passed Senate Bill 1011, which granted Metro a two-year extension and altered the process of designating reserve lands. Areas adjacent to the boundary can now be designated as urban or rural reserves. Under the new law, urban reserves are first to be brought into the growth boundary, while rural reserves are excluded from urbanization for 40 to 50 years. Metro designates urban reserves, while the subject County designates rural reserves; however, they must reach unanimous agreement. This new system was utilized in the most recent expansion cycle in 2009, and will be the basis for expansion going forward.

SUMMARY The Portland MSA continues to experience the effects of a slow economic recovery. Housing is still very depressed, and State and local governments are forced to make significant cuts in order to balance their budgets. However, there are some positive signs that the economy is slowly improving. While the public sector has cut some 10,000 jobs this year, the private sector has added 34,000, according to Oregon’s economist Amy Vander Vliet, and Oregon’s private sector is currently the seventh fastest growing in the nation. Manufacturing and exports, two major drivers of Oregon’s economy, have grown 1.7% for the year, 15th fastest in the nation.

Economists and policymakers are still concerned about conditions in foreign markets and how they could impact Oregon4. Possible worsening in the European debt crisis could constrict Oregon’s European export trade and further tighten international credit markets. Another area of concern are signs of slowing in China’s economic growth as China is Oregon’s biggest export destination (in 2010 about $4 billion of Oregon’s $17.7 billion in exports went to China). Any slowdown in the Chinese economy could impact Oregon, and there are concerns that China may be harboring a real estate bubble and a bigger economic slowdown than the country is letting on. In addition, political tensions over the value of Chinese currency could potentially lead to higher tariffs on Oregon exports to the country.

Over the long term, the Portland MSA will benefit from a growing population base and higher income and education levels. Although the Portland MSA experienced a decline in the number of jobs over the past decade, it has maintained a generally lower unemployment rate than Oregon during this time, which is a positive indicator. Moreover, the Portland MSA exhibits both a higher rate of GDP growth and a higher level of GDP per capita than Oregon overall. Based on these factors, we anticipate that the Portland MSA economy will gradually recover and employment growth will pick up pace, strengthening the demand for real estate.

3 Metro Council < www.metro-region.org/article.cfm?articleid=5370 > 4 http://www.oregonbusiness.com/articles/107-december-2011/6201-whats-ahead-2012-economic- forecast?start=2

PAGE 10 BLOCK 8 SURROUNDING AREA ANALYSIS

SURROUNDING AREA ANALYSIS

LOCATION The subject is located in the Central Business District of the City of Beaverton, approximately eight miles west of downtown Portland. More specifically, the subject is located along SW Farmington Avenue near the northern edge of Beaverton’s Old Town district, between SW Main and Angel Streets.

For the purposes of this report, the market area boundaries are defined as follows:

North SW Walker Road South SW Allen Boulevard East Highway 217 West SW Murray Boulevard

A map showing these boundaries and identifying the location of the property follows this section.

ACCESS AND TRANSPORTATION The neighborhood has excellent linkages. Primary access to the area is provided by Highway 217, with a full interchange located less than one mile east of the subject on Canyon Road. Highway 217 serves as a bypass between the I-5 Freeway and Highway 26, the major north- south and east-west freeways in the vicinity.

Other major arterials within the neighborhood include; SW Canyon Road (also known as Highway 8) running east-west, Beaverton-Hillsdale Highway (also known as Highway 10 and SW Farmington Road) running east-west, Cedar Hills Boulevard running north-south, the Hall Boulevard/Watson Avenue one-way couplet oriented north-south, Murray Boulevard running north-south, and SW Lombard Avenue which abuts the subject's eastern boundary and extends in a north-south direction.

Public transportation is provided by Tri-Met, which includes two nearby MAX light-rail stations and numerous bus routes. Efforts to alleviate traffic problems in Beaverton and other western suburbs resulted in construction of the West side light rail extension, which began operation in 1998. The 18 mile alignment reached 2005 ridership projections in only 19 months of operation. Today, the light rail system covers 38 miles in the Portland Metro area, and extends through downtown Portland to Hillsboro, Gresham, and the Portland Airport. The nearest MAX light rail stop is located less than one mile north along SW Lombard Avenue, named the Beaverton Transit Center.

In 2008, the Westside Express Service (WES) opened service to the public. The WES is a Tri-Met public transportation system that provides transportation every half hour from Wilsonville to Beaverton, at the nearby Beaverton Transit Center north of the subject along SW Lombard Avenue. The WES provides transportation only during the weekdays and during rush hours in the mornings and evenings.

PAGE 11 BLOCK 8 SURROUNDING AREA ANALYSIS The subject is approximately eight to ten blocks southwest of the Beaverton Transit Center. The transit network in the immediate vicinity of the subject is shown below.5 The local market perceives public transportation as good compared with other market areas in the region. However, the primary mode of transportation in this area is the automobile.

Portland International Airport is located about 20 miles from the market area; travel time is about 30 minutes, depending on traffic conditions. The Portland CBD, the economic and cultural center of the region, is approximately 8 miles from the market area.

LAND USE The Beaverton CBD contains a diverse mixture of uses including suburban retail stores, banks, low rise offices, convenience stores, service stations, fast food outlets, restaurants and car dealerships. Land uses along secondary streets are primarily older single family residential with some older multifamily uses such as duplex units and small apartment properties. Most commercial uses are concentrated along the major arterial routes that extend through the area and in the old downtown. Additional land use factors are summarized below:

5 Tri-Met Interactive Map System < http://www.trimet.org/interactivemap/tmMap.jsp >

PAGE 12 BLOCK 8 SURROUNDING AREA ANALYSIS

SURROUNDING AREA LAND USE Predominant Age of Improvements Between 0 and 75 years Predominant Quality and Condition Average Approximate Percent Developed 95-100% Life Cycle Stage Transitional Infrastructure/Planning Good Predominant Location of Undeveloped Land North, West Prevailing Direction of Growth North, with some in-fill and redevelopment sites interspersed throughout the neighborhood.

DEVELOPMENT ACTIVITY AND TRENDS Downtown Beaverton contains a diverse mixture of uses including suburban retail stores, banks, low rise offices, convenience stores, service stations, fast food outlets, restaurants and car dealerships. Land uses along secondary streets are primarily older single family residential with some older multifamily uses such as duplex units and small apartment properties. Most commercial uses are concentrated along the major arterial routes that extend through the area and in the old downtown.

The neighborhood is in a transitional stage, and is beginning to change as previously improved sites are redeveloped. The Round, a multiphase project that includes condominiums, Class A office, retail uses, health services, apartments, and senior housing is located north of the subject near the Beaverton Transit Center.

Over the years, commercial development along the major arterials in the neighborhood has changed from uses oriented exclusively towards local residents to destination uses serving a wider geographic and demographic market. Commercial development in the immediate old town area surrounding the subject and away from the arterials draws market support from a more localized area.

PAGE 13 BLOCK 8 SURROUNDING AREA ANALYSIS

DEMOGRAPHICS A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table.

SURROUNDING AREA DEMOGRAPHICS Washington 2010 Estimates 1-Mile Radius 3-Mile Radius 5-Mile Radius County Portland MSA State of Oregon Population 2000 10,954 107,529 290,284 445,342 1,927,881 3,421,399 Population 2010 12,076 117,599 334,809 539,618 2,255,276 3,865,839 Population 2015 12,528 122,601 356,147 580,457 2,412,000 4,069,317 Compound % Change 2000-2010 1.0% 0.9% 1.4% 1.9% 1.6% 1.2% Compound % Change 2010-2015 0.7% 0.8% 1.2% 1.5% 1.4% 1.0%

Households 2000 4,770 45,486 119,993 169,162 745,531 1,333,723 Households 2010 5,129 49,433 136,779 202,483 866,944 1,508,399 Households 2015 5,306 51,498 145,230 217,446 926,959 1,589,342 Compound % Change 2000-2010 0.7% 0.8% 1.3% 1.8% 1.5% 1.2% Compound % Change 2010-2015 0.7% 0.8% 1.2% 1.4% 1.3% 1.1%

Median Household Income 2010 $54,173 $60,366 $65,688 $66,490 $61,823 $53,104 Average Household Size 2.3 2.4 2.4 2.6 2.6 2.5 College Graduate % 41% 44% 48% 38% 33% 29% Median Age 34 37 36 35 36 38 Owner Occupied % 44% 50% 54% 57% 58% 58% Renter Occupied % 49% 43% 40% 37% 34% 32% Median Owner Occupied Housing Value $334,252 $313,879 $340,268 $306,938 $273,500 $234,253 Median Year Structure Built 1967 1973 1976 1981 1974 1973 Avg. Travel Time to Work in Min. 23 22 22 24 25 22 Source: STDB/ ESRI

As shown above, the current population within a 1-mile radius of the subject is 12,076, and the average household size is 2.3. Population in the area has grown since the 2000 census, and this trend is projected to continue over the next five years. Compared to the Portland MSA overall, the population within a 3-mile radius is projected to grow at a slower rate.

Median household income is $54,173, which is lower than the household income for the Portland MSA. Residents within a 1-mile radius have a higher level of educational attainment than those of the Portland MSA, while median owner occupied home values are considerably higher.

EMPLOYMENT Beaverton has been growing rapidly in terms of regional demographic and economic significance since the 1970s. In the last decade, the city has become the economic hub of Washington County’s east suburbs, which have experienced the largest and most rapid population growth in the Portland Metropolitan Area. Once known primarily as a bedroom community of Portland, Beaverton has become its own commercial and industrial center, with a solid employment base that draws market support from throughout the southwest suburban area.

OUTLOOK AND CONCLUSIONS The neighborhood is in the early stages of revitalization, as evidenced by recent developments. The area is substantially built out, but there are quite a few vacant sites available within the Beaverton Old Town district. The neighborhood is well served by public transportation, and has good linkages to surrounding communities and the Central Business District of both Beaverton and Portland.

PAGE 14 BLOCK 8 SURROUNDING AREA ANALYSIS Considering the currently depressed commercial real estate market, including office, retail, and multifamily residential, it is unlikely that any new speculative development will occur within the subject’s immediate neighborhood; only in the form of an owner user or a build- to-suit development would this be likely, or possibly for multi-family residential (which is a strong market segment at the moment). The market for vacant land, speculative construction, and the commercial leasing market has been flat to slowly growing over the past 24 months. Future growth and appreciation over time is dependent upon full economic recovery.

PAGE 15 BLOCK 8 SURROUNDING AREA ANALYSIS

SURROUNDING AREA MAP

PAGE 16 BLOCK 8 OFFICE MARKET ANALYSIS

OFFICE MARKET ANALYSIS

PORTLAND METROPOLITAN OVERVIEW Unless otherwise noted, the following analysis relies on statistics compiled by Costar and additional data from Grubb & Ellis’ Trends - Portland Office Market and Office Quarterly Report publications.

Portland-Vancouver’s office market has approximately 67 million square feet of rentable area; this excludes owner-occupied buildings and buildings with rentable area below 5,000 square feet6. Of this total, ±48% represents Class A space, 37% Class B space, and 14% of Class C space. Vacancy trends in the Portland-Vancouver area office market are summarized in the following graph based on CoStar data.

Overall Office Vacancy - Portland Metro 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2003 1Q 2003 3Q 2004 1Q 2004 3Q 2005 1Q 2005 3Q 2006 1Q 2006 3Q 2007 1Q 2007 3Q 2008 1Q 2008 3Q 2009 1Q 2009 3Q 2010 1Q 2010 3Q 2011 1Q 2011 3Q 2012 1Q QTD

The Portland metro office sector experienced a decline in vacancy from 16.1% in early 2004 to 9.8% in the fourth quarter 2007. However, in early 2007, a number of sub-prime mortgage lenders nationwide were forced to consolidate their branch offices or close down completely, leaving behind empty office space. This was compounded by the last recession, which pushed vacancy upward through the third quarter of 2010 when it reached 14%. The fourth quarter 2010 saw the first meaningful decline in vacancy since 2008, and vacancy has been gradually declining since. Vacancy has fluctuated in a narrow range between 12.4% and 12.7% over the last four quarters, and currently stands at 12.5%.

The following table highlights historical vacancy rates in the individual submarkets based on Grub & Ellis. It should be noted that this source did not publish second quarter data due to difficulties related to restructuring, and there is currently no other source that would provide historical vacancy by submarket as well as by building class. The subject is located in the Beaverton/Sylvan submarket, which has one of the highest vacancy rates for all classes of product.

6 www.CoStar.com

PAGE 17 BLOCK 8 OFFICE MARKET ANALYSIS

PORTLAND MSA OFFICE SUBMARKET VACANCY Class A Class B Class C Q1 08 Q1 09 Q1 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q1 08 Q1 09 Q1 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q1 08 Q1 09 Q1 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Beaverton/Sylvan 17.3% 18.2% 16.4% 14.6% 12.7% 11.7% 11.7% 16.3% 13.5% 18.2% 14.7% 16.4% 16.6% 16.0% 16.0% 15.7% 15.7% 16.0% 22.2% 21.1% 22.1% 21.4% 21.2% 21.3% 20.7% 21.4% 20.0% CBD (Incl. Pearl & Old Town) 4.7% 6.5% 8.0% 7.1% 6.3% 6.2% 6.5% 6.5% 7.6% 11.2% 11.0% 14.8% 12.5% 14.5% 13.9% 13.7% 12.8% 13.2% 12.9% 11.9% 13.5% 11.9% 12.7% 13.2% 11.7% 11.9% 11.6% Clackamas/Sunnyside 6.6% 11.8% 14.4% 23.2% 20.9% 21.3% 16.8% 17.1% 16.4% 11.3% 7.0% 14.4% 12.7% 16.3% 16.3% 17.6% 17.9% 15.1% 12.4% 3.5% 2.9% 8.6% 5.1%2.5%3.5%3.5%7.7% Clark County 10.3% 14.2% 17.6% 16.3% 13.9% 16.9% 16.8% 15.0% 15.0% 13.6% 15.1% 17.6% 16.8% 14.8% 13.6% 11.6% 10.3% 9.0% 15.8% 4.4% 11.4% 7.1% 6.6% 7.4% 7.4% 9.2% 7.7% Columbia Corridor 2.0% 4.5% 32.0% 30.2% 27.5% 28.7% 24.0% 22.0% 21.2% 18.7% 20.2% 32.0% 22.2% 24.1% 26.8% 28.8% 30.6% 28.9% 37.9% 12.9% 16.5% 16.5% 16.5% 16.5% 17.1% 17.1% 17.1% * Eastside 7.1% 3.4% 5.0% 8.6% 6.0% 7.5% 7.7% 7.1% 5.8% 12.4% 8.6% 8.6% 8.9% 11.0% 10.2% 10.4% 12.5% 10.0% 5.4% 6.5% 6.6% 7.7% 11.6% 6.1% 6.5% 7.8% 8.4% Johns Landing/Barbur Blvd. 14.2% 13.0% 16.1% 28.3% 28.3% 27.0% 25.8% 25.9% 25.9% 12.8% 13.2% 16.1% 13.7% 11.1% 9.4% 10.1% 10.3% 9.7% 16.8% 25.8% 13.6% 29.9% 28.4% 28.4% 28.4% 28.9% 18.4% Lloyd District 3.6% 3.7% 5.4% 4.7% 6.0% 5.8% 6.1% 6.1% 5.5% * 5.2% 10.5% 5.4% 10.4% 10.5% 9.2% 9.2% 8.6% 11.3% 9.5% 0.0% 0.0% 32.4% 32.4% 32.4% 28.8% 24.9% 32.6% * Northwest No Class ANo Class A No Class A 7.6% 7.0% 13.0% 11.6% 10.1% 10.2% 13.4% 13.4% 14.3% 1.4% 5.5% 5.1% 6.6% 6.6% 6.3% 6.0% 5.7% 2.1% Sunset Corridor 16.2% 22.1% 24.2% 24.7% 27.1% 27.1% 24.8% 22.6% 25.8% 29.2% 32.7% 24.2% 28.1% 21.0% 21.4% 20.9% 21.3% 20.7% 10.7% 10.2% 16.6% 16.0% 12.4% 12.4% 15.4% 15.1% 12.4% Tualatin/Wilsonville 24.4% 30.9% 35.1% 31.1% 30.3% 31.2% 32.2% 32.3% 31.1% 23.1% 23.5% 35.1% 34.9% 37.0% 37.2% 37.0% 38.9% 37.5% 10.5% 3.3% 13.4% 16.9% 17.1% 17.2% 15.9% 16.2% 15.4% Washington Sq/Kruse Way 12.7% 15.7% 22.2% 19.6% 19.0% 21.9% 21.9% 20.3% 20.6% 13.7% 19.6% 22.2% 21.2% 20.6% 17.6% 16.4% 15.8% 16.5% 4.0% 5.7% 13.5% 10.4% 12.4% 10.3% 6.1% 10.9% 5.6% Portland MSA Overall 9.3% 11.9% 14.8% 14.1% 13.6% 14.4% 14.1% 13.5% 14.2% 13.6% 14.3% 14.8% 15.8% 15.6% 14.9% 14.7% 14.6% 14.2% 12.8% 10.6% 12.6% 12.9% 13.5% 13.3% 12.3% 12.7% 12.0% * Submarket data set includes five or fewer buildings within the class.

PAGE 18 BLOCK 8 OFFICE MARKET ANALYSIS

In comparison to overall national office market conditions, the Portland market appears to be faring well on a relative scale with current vacancy below the national average of 13.8% according to CoStar.

Vacancy rates in the Portland Metropolitan Area have favored the CBD in recent years when compared to the suburban office market. This is evidence of the slow, but steady migration from suburban office markets back to the urban core. The following graph shows the vacancy rate difference between the two markets since the second quarter of 2009.

CBD vs. Suburban Vacancy 18.0% 16.0% CBD 14.0% Suburban 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2007 1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012 2Q 2012 QTD

CONSTRUCTION &ABSORPTION The first quarter of 2009 was the first quarter with negative absorption since the beginning of 2007. According to Grubb & Ellis, the office sector experienced the worst absorption loss in the first quarter 2009 in over 20 years.

Overall, 2010 and 2011 was a welcome change from the steady absorption losses of 2009, and so far 2012 suggests moderate demand. Absorption statistics have been positive in seven of the past eight quarters with only the second quarter 2012 showing a nominal setback. According to CoStar, absorption totaled 786,583 square feet in 2011 and year to date absorption is 260,444 square feet, indicating annualized absorption rate of ±390,000. A significant portion of this absorption is attributable to the CBD.

Construction and absorption trends from 2007 to date are depicted in the chart below:

PAGE 19 BLOCK 8 OFFICE MARKET ANALYSIS

Portland Metro Construction & Absorption 700,000 Absorption 500,000 Construction

300,000

100,000 2007 1Q 2007 2Q 2007 3Q 2007 4Q 2008 1Q 2008 2Q 2008 3Q 2008 4Q 2009 1Q 2009 2Q 2009 3Q 2009 4Q 2010 1Q 2010 2Q 2010 3Q 2010 4Q 2011 1Q 2011 2Q 2011 3Q 2011 4Q 2012 1Q 2012 2Q QTD -100,000

-300,000

-500,000

-700,000

The construction pipeline remains subdued. Total deliveries in 2010 amounted to 460,320 square feet, nearly ½ of the delivery totals in 2008 and 2009. Only two buildings were delivered metro-wide in 2011 totaling just 176,200 square feet according to Grubb & Ellis. Over 85% of the delivered product was pre-leased prior to completion.

The table below summarizes projects currently under construction (totaling 224,168 square feet) in the individual submarkets based on information compiled by Norris Beggs & Simpson:

PAGE 20 BLOCK 8 OFFICE MARKET ANALYSIS

Based on CoStar data, the medical office building at 830 NW Dale (Beaverton) is only listed for sale only (not available for lease); the remaining space is 57% pre-leased.

Please note that the preceding table excludes the Park Avenue West building in the CBD due to a lack of financing, which resulted in halting construction in 2010. Construction may resume sometime in late 2013.

RENTAL RATES &CONCESSIONS Overall, Class A office asking rates decreased in the first quarter 2012 from $23.22 to $22.96 per square foot. Asking rents remain well below the $25.30 rate posted in the fourth quarter of 2008, at the onset of the recession.

Rental rates in the CBD surpassed suburban rental rates in 2006 and the rental rate gap between the two markets has generally been on the increase since that time. Currently, Class A rents in the CBD are 16% higher than suburban Class A rents, even though tenants in the CBD have the additional expense of parking, unlike many of their suburban counterparts.

As is evidenced in the table that follows, the subject’s Beaverton/Sylvan submarket has some of the lowest rents/sf for each Class, and lower than the Metro average. This, combined with the above average vacancy confirms that the subject’s immediate submarket is not an established office location.

The following table highlights past quarter and year-over-year rental rates in the individual submarkets based on Grubb & Ellis; second quarter 2012 data is not available from this source and no other source offers a historical breakdown by submarket as well as by building class.

PAGE 21 BLOCK 8 OFFICE MARKET ANALYSIS

PORTLAND MSA OFFICE SUBMARKET ASKING RENTAL RATES Class A Class B Class C Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q3 10 Q4 10 Q1 11 Q2 11 3Q 11 4Q 11 1Q 12 Q3 10 Q4 10 Q1 11 Q2 11 3Q 11 4Q 11 1Q 12 Beaverton/Sylvan $21.10 $20.47 $19.94 $19.86 $21.05 $21.73 $20.88 $16.87 $16.40 $16.48 $16.36 $16.95 $16.60 $16.75 $15.99 $16.11 $15.98 $15.95 $15.38 $15.56 $15.44 CBD (Incl. Pearl & Old Town) $26.50 $26.11 $26.04 $25.47 $25.99 $26.19 $25.60 $20.79 $20.56 $21.15 $21.21 $21.17 $21.29 $21.00 $17.65 $17.34 $17.87 $18.17 $18.23 $18.29 $18.44 Clackamas/Sunnyside $23.61 $23.38 $23.53 $23.35 $23.47 $23.50 $23.19 $18.59 $18.46 $18.32 $18.89 $18.99 $18.47 $17.78 $14.56 $14.22 $14.26 $13.58 $13.48 $13.48 $13.55 Clark County $23.05 $22.54 $22.58 $22.45 $22.50 $22.63 $22.40 $18.98 $18.56 $18.56 $18.11 $18.38 $19.65 $20.25 $16.80 $17.14 $17.47 $16.00 $14.50 $15.12 $14.87 Columbia Corridor $24.45 $24.37 $24.37 $23.88 $23.67 $23.74 $23.67 $15.48 $15.29 $15.26 $17.11 $16.88 $17.37 $16.39 $13.10 $13.10 $13.05 $13.05 $13.08 $13.08 $13.08 * Eastside $15.69 $19.97 $19.58 $19.79 $21.06 $23.51 $20.99 $16.87 $16.29 $16.23 $16.18 $17.10 $17.15 $16.48 $13.66 $13.81 $14.81 $15.60 $14.88 $15.65 $14.15 Johns Landing/Barbur Blvd. $22.47 $22.30 $22.18 $22.23 $22.00 $22.20 $22.12 $18.09 $18.27 $18.21 $17.89 $17.98 $17.83 $18.07 $14.93 $16.23 $17.26 $17.26 $17.48 $17.32 $16.99 Lloyd District $23.74 $23.81 $23.82 $23.82 $24.10 $24.11 $23.84 $16.38 $16.82 $16.41 $17.29 $17.19 $17.14 $15.93 $19.00 $19.00 $19.00 $19.00 $19.00 $19.00 $19.00 * Northwest N/Ap N/Ap N/Ap N/Ap N/Ap N/Ap N/Ap * $18.23 $18.00 $17.92 $17.41 $17.27 $17.23 $17.21 $19.12 $19.22 $19.22 $21.55 $20.73 $24.60 $22.90 Sunset Corridor $20.75 $20.44 $19.60 $19.28 $19.51 $19.04 $19.00 $16.86 $16.74 $16.89 $16.90 $16.86 $14.30 $14.21 $14.00 $14.00 $14.00 $14.00 $13.81 $15.60 $14.00 * Tualatin/Wilsonville $22.69 $21.62 $21.36 $21.22 $21.20 $20.80 $20.65 $19.61 $19.34 $19.34 $19.25 $19.27 $19.20 $18.75 $17.67 $17.77 $18.37 $18.46 $18.68 $18.66 $18.63 Washington Sq/Kruse Way $24.04 $23.44 $23.89 $24.00 $24.07 $24.18 $24.00 $20.32 $20.02 $19.83 $19.72 $19.66 $19.70 $19.36 $16.57 $16.48 $16.23 $16.56 $13.92 $13.38 $14.47 Portland MSA Overall $23.74 $23.16 $23.09 $22.93 $23.15 $23.22 $22.96 $18.43 $18.25 $18.57 $18.54 $18.84 $18.63 $18.51 $17.00 $16.85 $17.21 $17.49 $17.33 $17.41 $17.31 * Submarket data set includes five or fewer buildings within the class.

PAGE 22 BLOCK 8 OFFICE MARKET ANALYSIS Post-recession growth in Oregon and Portland was anemic early on; unemployment remained stubbornly flat for many months, but has begun to decline. As of July 2012 (most recent figures available), the Portland MSA seasonally adjusted unemployment rate was 8.1%, down from 9.2% one year earlier, and based on reports by State economists, Portland’s job growth is among the highest in the nation. In spite of the recent declines, unemployment remains well above the 4.9% to 6.4% rates that prevailed in the months leading up to the recession (January – October, 2008).

The Portland metro area is experiencing improving economic conditions; nonetheless, demand for office remains sluggish, and attracting and retaining tenants will continue to be a top priority for most property owners. Concessions also continue to be a common feature, but vary among the submarkets (depending on submarket conditions) as well as among property classes and space sizes.

INVESTMENT ACTIVITY Investment activity increased in 2011, but remains fairly low overall in 2012 (essentially flat). A lack of available properties is the primary reason for the low volume as many owners are reluctant to sell at current pricing, and are willing to hold on until the market recovers. Demand, however, remains fairly strong at both ends of the spectrum (troubled assets and top tier assets). Examples of recent sizeable transaction involving properties with occupancy problems (which is reflected in pricing) include the South Office building at The Round, which was purchased by the City of Beaverton for $82.50 per square foot with 42% occupancy; and the sale of a Class A office at 7624 SW Durham Road for $118 per square foot with 66% occupancy. On the opposite side of the spectrum was First Tech Credit Union, which sold for $233 per square foot fully leased to a credit tenant (west of the subject towards Tektronix and Nike).

CONCLUSION The office market continues to be bifurcated between the CBD and the Suburban submarkets. Portland’s CBD continues to be among the nation’s healthier markets, and market conditions are slowly shifting in favor of the landlord, particularly when it comes to large blocks of space. Relatively low vacancy has led to a spate of Class B redevelopment/re-positioning projects in the recent quarters; however, new construction is beginning to level off and product currently under construction represents just a small fraction of existing supply.

The suburban markets appear to have stabilized to some degree, but continue to experience higher vacancy rates and lower rents. The subject’s immediate Beaverton/Sylvan submarket is oversupplied and not an established office market – speculative new office construction would not be cost feasible. However, the low level of new construction should help further stabilize market conditions in the foreseeable future.

PAGE 23 BLOCK 8 RETAIL MARKET ANALYSIS

RETAIL MARKET ANALYSIS

DATA SOURCES For the purpose of correlating market conditions in the Portland metro area with national conditions, we primarily rely on data compiled by CoStar Properties, the only readily available, comprehensive source of national data published on a quarterly basis. Even though CoStar’s average vacancy and rental rate figures for the Portland metro area differ from data published by local sources, which are more in tune with the nuances of the local market, CoStar has extensive national presence, and assuming consistency of data collection among all markets, CoStar provides a good indication of trends on the national level. It also provides a benchmark that makes it possible to evaluate the relative strength of the Portland market on a national level.

To analyze market conditions on the local (Portland metro area) level, we also rely on reports generated by brokerage firms with a strong local presence such as Norris Beggs & Simpson, Marcus & Millichap, Norris & Stevens, Kidder Matthews, and others as referenced below. These sources, which are intimately familiar with the local submarkets and geographic boundaries, are well aware of trends that may be unique to the local area, and are knowledgeable about significant sale and lease transactions in the local market.

NATIONAL MARKET OVERVIEW Vacancy U.S. retail market conditions are improving. After peaking at 7.6% at the end of 2009, vacancy has been stable since the fourth quarter 2010, holding steady with a slight downward trend in the past two quarters. Vacancy at the end of the most recent quarter was 6.9%. In contrast, Portland metro vacancy has been consistently below national levels, and currently stands at 5.4%.

VACANCY TRENDS 8.0%

7.5%

7.0%

6.5% National

Portland 6.0%

5.5%

5.0% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12

Sublease space reached 31.5 million square feet in 2011, but was down to 28.7 million square feet by year end, and is currently at 27.9 million and stable.

PAGE 24 BLOCK 8 RETAIL MARKET ANALYSIS Nationwide, net absorption in the first half of 2012 was at an annual rate that is about 51% of 2011 absorption, but is still positive, and the second quarter was slightly more robust than the beginning of the year. Second quarter 2012 net absorption was positive in 105 out of 142 markets tracked by CoStar (compared with 87 at the beginning of 2011 and only 66 at the beginning of 2010), indicating a steady improvement.

In comparison with national trends, Portland finished the year with an overall vacancy rate of 5.4%, a clear improvement from 6.2% at the beginning of the year and well below the 6.9% national average.

Rental Rates Asking rents appear to be stabilizing. Average asking rent nationwide declined from $15.60 at the beginning of 2010 to $14.86 at the beginning of 2011, but has been fluctuating in a tight range between is $14.51 and $14.58 over the last three quarters.

Construction remains measured which should help in absorbing existing supply; retail product under construction currently represents an addition of only 0.24% of total inventory.

The table below provides a comparison of the Portland metro area with other markets in the region as well as with national averages.

CONDITIONS IN WESTERN REGION MARKETS - Q2 2012* Net Absorption as Under Conts. Leasable SF Vacancy Absorption Deliveries SF Under Asking % of Total as % Total (x1,000) % SF YTD YTD Construction Rent Leasable Leasable Las Vegas 111,826 10.8% 429,732 278,000 362,732 $16.41 0.38% 0.32% Los Angeles 460,343 5.1% (421,661) 222,048 445,662 $24.12 -0.09% 0.10% Phoenix 215,239 11.8% 1,210,879 326,548 480,146 $14.61 0.56% 0.22% Portland 106,721 5.4% (10,624) 130,685 207,013 $15.77 -0.01% 0.19% Sacramento 118,450 10.1% 225,924 71,234 107,127 $16.23 0.19% 0.09% San Diego 135,255 5.1% 296,630 82,927 520,995 $20.98 0.22% 0.39% San Francisco 85,982 2.8% 82,535 0 4,348 $29.39 0.10% 0.01% Seattle/Puget Sound 178,911 5.8% 993,561 429,803 673,755 $17.87 0.56% 0.38% National 12,487,391 6.9% 19,904,480 18,490,724 29,600,841 $14.51 0.16% 0.24% * CoStar

PAGE 25 BLOCK 8 RETAIL MARKET ANALYSIS Marcus & Millichap tracks fundamentals in 44 major retail markets nationwide, and produces a National Retail Index (NRI). The NRI ranks markets based on a series of 12-month, forward-looking economic and supply and demand variables. Markets are ranked based on their cumulative weighted-average scores for various indicators, including forecast employment growth, vacancy, construction and rents. Weighing both the forecasts and incremental change over the next year, the index is designed to indicate relative supply and demand conditions at the market level. According to the most recently published NRI (first quarter 2012), Portland ranked 6th, up from 13th place one year ago, behind San Francisco, San Jose, Seattle, San Diego and Austin.

Investment Trends After a “dry spell” during which investors were reluctant to enter the retail sector due to the sluggish progress of the economic recovery, and primarily targeted institutional-grade assets, sales of retail properties are picking up. According to Marcus & Millichap, retail investment sales increased 30% in 2011, and retail mortgage originations increased 51% last year (2012 figures are not available). Transactions between $10-20 million nearly doubled from 2010. Lenders are still cautious, requiring higher equity and placing great emphasis on strong tenant profile and proven locations. This source also points out that over 2.6 billion of CMBS retail loans that will mature in 2012 have a debt service coverage ratio below 1.0, and lenders will require substantial equity upon refinancing. Thus, there may be some new opportunities for investors.

KEY DRIVING FORCES The retail sector is directly impacted by consumer spending and employment, two key forces shaping the economy.

Consumers ratcheted down retail spending sharply in 2008-09, but retail sales have since resumed growth that characterized the earlier 2000’s. However, spending is now driven more by current disposable income rather than credit.

According to the July 2012 Advance Monthly Sales for Retail And Food Services report published by the U.S. Census Bureau, the largest increase in sales volume was in in sporting goods, hobby, book and music stores (10.6% increase from 2011 and 4.3% from one month before). The only meaningful decline since one year ago was gas station sales primarily due to a drop in prices of gasoline (-2.6%) followed by department stores (-1.0%) and electronics & appliance stores (-0.8%).

While the steady growth in retail sales is a step in the right direction, internet retailing continues to expand, putting pressure on traditional retailers to downsize their footprint. U.S. e-commerce sales totaled $194.3 billion in 2011, up 16.1% from $167.3 billion in 2010. July 2012 figures published by the U.S. Census Bureau indicate non-store sales increased 1.5% from June to July 2012 and 11.8% from July 2011.

Historical trends in retail sales are depicted in the following graph:

PAGE 26 BLOCK 8 RETAIL MARKET ANALYSIS

Trends in U.S. Retail Sales Excluding Motor Vehicle and Parts Dealers $300,000

$290,000

$280,000

$270,000

$260,000

$250,000

$240,000

$230,000

$220,000 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12

PORTLAND METRO AREA The Portland metro retail sector appears to have stabilized in 2010 after a steep decline in 2009-2010.

Vacancy According to Norris Beggs & Simpson, Portland metro area retail vacancy currently stands at 6.9%, down significantly from 8.0% in mid-2010, but more or less stable over the past 18 months with just a slight uptick in past six months as depicted in the following graph based on NBS data. The slight increase was largely attributable to the CBD, where vacancy increased from 6.3% in the first quarter to the current 11.7% - about one third of the CBD losses for the quarter was due to the closure of Bally Total Fitness at Yamhill Marketplace; Pioneer Place also lost 53,182 square feet including a J Jill store. More or less stable vacancy is also reported by Kidder Mathews (5.5%) and Marcus & Millichap (7.4%).

PAGE 27 BLOCK 8 RETAIL MARKET ANALYSIS

The closure of Borders Books added around 100,000 square feet to available supply in the second half of 2011; however, this new vacancy was offset by positive absorption elsewhere in the market. Wal-Mart is delivering on last year’s promise to expand in the local market, opening a new neighborhood market in one of the vacant big boxes along Cornell Road in Beaverton (May 2012). Stand-alone Wal-Mart grocery stores will be opening in Gresham (August) and West Linn (next spring) in addition to new Oregon locations outside the Portland metro area, and a new 137,900-square-foot Wal-Mart superstore is underway in the Tigard Triangle area (target opening date October 2013).

Wal-Mart’s neighborhood market concept is one example of a new phenomenon among big box retailers: downsizing helps increase store productivity by keeping less profitable merchandise off the shelves (while still available on-line), and having smaller stores in closer proximity to each other enables the retailer to reach a greater number of consumers who, as a result of increasing cost of fuel, have become less willing to drive longer distances to do their shopping. Other examples of this phenomenon are Target, Best Buy, Old Navy, and The Gap. Most of these retailers are opening their new outlets in spaces as small as 50% of their traditional size. Marcus & Millichap is speculating that health & fitness and discount stores will absorb most of the newly vacated space; one such example is a 17,600-square foot lease to Jazzercise at Hillsboro Town Center last quarter; and, Dollar General, Dollar Tree and Family Dollar plan to open a total of 1,225 stores nationwide in 2012.

PAGE 28 BLOCK 8 RETAIL MARKET ANALYSIS Norris Beggs & Simpson also tracks vacancy by type of retail. The greatest improvement was seen in Strip Convenience centers; however, these centers continue to have the highest vacancy (currently 20.0%) due to their typical tenant profile - small local tenants who are most vulnerable to negative changes in the economy.

Vacancy by type of retail is tabulated below7.

VACANCY BY CENTER TYPE U(from Q1 '10 Q2 '10 Q3 '10 Q4 '10 1Q '11 2Q '11 3Q '11 Q4 '11 Q1 '12 Q2'12 Prev. Qtr.) Community Center 6.0% 6.5% 5.4% 5.1% 5.2% 5.1% 5.0% 4.8% 5.9% 5.8% -0.1% Convenience 9.8% 10.9% 11.1% 9.9% 9.5% 10.2% 9.7% 12.5% 13.7% 13.6% -0.1% Freestanding 6.9% 9.3% 10.5% 11.7% 7.8% 7.3% 6.9% 6.9% 12.7% 12.4% -0.4% Neighborhood 8.9% 8.6% 6.9% 7.3% 6.8% 7.4% 7.4% 7.9% 8.0% 7.9% -0.1% Regional 8.4% 8.5% 6.8% 6.4% 7.5% 6.4% 6.9% 6.1% 5.6% 6.4% 0.9% Specialty 11.6% 12.3% 8.9% 8.1% 7.2% 8.2% 7.6% 7.1% 8.3% 10.4% 2.1% Strip Convenience 20.7% 20.1% 18.9% 19.2% 18.2% 20.9% 20.6% 20.3% 20.4% 20.0% -0.4% Super Regional 3.9% 4.7% 2.9% 2.7% 2.7% 2.5% 2.4% 2.5% 2.4% 2.6% 0.2% Urban 12.7%10.1%9.0%8.6%7.2%7.1%8.2%7.9%6.4%7.2%0.8% Total 8.0% 8.0% 6.5% 6.4% 6.3% 6.3% 6.4% 6.4% 6.7% 6.9% 0.2%

Rental Rates Currently the most comprehensive source of overall rental rates for the Portland metro area is CoStar Properties, which tracks over 93 million square feet of retail space in the area. It should be noted that statistics presented in this section exclude the CBD, where the majority of retail space is located on the ground floor of office and residential buildings, and is not tracked reliably. It also excludes certain categories that are not considered to be traditional retail by most market participants (auto dealerships, car wash, day care, movie theater, funeral home, parking garage/lot, service station, truck stop, and veterinary/kennel uses).

After peaking at $18.31 per square foot at the end of 2008, average asking rent has declined to $15.50 per square foot according to CoStar. A decline in asking rental rates has also been reported by leasing brokers over the past couple of years. Kidder Mathews, who also tracks rental rates in the local market, indicates that asking rental rates continued to decline through the end of 2011, and appear to be leveling off with a current average of $15.73.

It should be noted that the average is based on available supply that has a published asking rent, and does not take into consideration properties that have no vacancy (thus no asking rent) or properties with “negotiable” rents. Based on this methodology, average asking rent can also potentially change within a single property based on the type of available space (big box, end-cap, etc….).

Trends in asking rents, based on data compiled by CoStar and Kidder Mathews, are highlighted in the following graph.

7 Norris Beggs & Simpson, Retail Report –Second Quarter 2012

PAGE 29 BLOCK 8 RETAIL MARKET ANALYSIS

PORTLAND METRO AREA - ASKING RENTAL RATE TRENDS $19.00 $18.50 Kidder Mathews CoStar $18.00 $17.50 $17.00 $16.50 $16.00 $15.50 $15.00 $14.50 $14.00 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 2011 Q3 2011 Q4 2012 Q1 2012 Q2

Looking ahead, Marcus & Millichap is projecting vacancy to decline 30 basis points for the balance of the year. According to this source, asking rates are expected to post a nominal 0.6% increase, and the increase in effective rates is expected to be greater at 1.1% as concessions are slowly phased out.

Significant Transactions Most deals are reportedly made for small spaces, and some of the leasing activity is fueled by tenant relocation to downsize or upgrade locations. However, activity appears to be picking up in the mid-size and large spaces as evidenced by a number of larger deals in the past year. Some transactions of note are:

ƒ Target store in downtown’s Galleria; the space is under reconstruction, and the store is expected to open in Spring 2013. ƒ In December the City of Portland granted a permit for a new 137,000-square foot Target on Hayden Island Drive, which will replace the existing store. ƒ WalMart has leased 53,000 square feet at Hayden Meadows, and plans to replace this building with a new 90,000-square foot store featuring a 40,000-square foot eco roof. ƒ Also of note is a lease for 31,020 square feet by T.J. Maxx, who will be moving into a downtown Portland basement space currently occupied by Office Depot; the lease was signed earlier this year. ƒ Zupan’s Market has opened in the former Wizer’s space at the newly renovated Lake Grove Village.

PAGE 30 BLOCK 8 RETAIL MARKET ANALYSIS ƒ Apple is allegedly proposing to demolish the two-level former Sak’s Fifth Avenue store downtown Portland and construct a single-level retail store and plaza; according to media reports, Apple received approval from the Bureau of Development Services’ Design Commission in July. ƒ Punch Bowl Social leased 28,490 square feet at Pioneer Place (CBD), and plans to open an entertainment complex which will include bowling, parlor games, a restaurant and a bar. Opening is scheduled for this fall. New Construction After robust deliveries in 2009, construction declined significantly in response to the downturn in the market, and continues at a measured pace. Currently only two submarkets have construction underway. This includes a 138,000-square foot Target store at Jantzen Beach which replaces an existing inefficient two story store; a 25,000-square foot speculative development (192nd Station) in Vancouver; and, a 12,000-square foot retail/restaurant building in Washougal.

The lack of new speculative construction should continue to put downward pressure on vacancy in the foreseeable future and help stabilize and strengthen rents.

Summary of Key Indicators The following table, based Norris Beggs & Simpson’s second quarter 2012 survey, summarizes key indicators in the individual submarkets.

PORTLAND METRO SUBMARKET ABSORPTION & CONSTRUCTION Second Quarter 2012 Total QTD Net SF Under Inventory SF Avail. SF % Vacant Absorption SF Construction 122nd/Gresham 5,797,368 626,801 10.8% 54,985 0 Central City 2,245,149 262,619 11.7% (122,181) 0 Southeast/East Clackamas 5,199,964 311,534 6.0% 503 0 Eastside 5,701,820 114,648 2.0% (6,091) 138,000 Sunset Corridor 5,243,769 348,982 6.7% 40,413 0 Southwest 11,548,845 619,122 5.4% (24,410) 0 Vancouver 9,590,204 848,102 8.8% (22,360) 37,000 Total 45,327,119 3,131,808 6.9% (79,141) 175,000

PAGE 31 BLOCK 8 RETAIL MARKET ANALYSIS The subject is situated in central Beaverton which is a traditional suburban retail hub, with the neighborhood anchored by the Beaverton Fred Meyer; Beaverton Town Center; and, Cedar Hills Crossing to the north. The vacancy in the subject’s submarket is approximately 5.4% per the above table, and has historically had good occupancy characteristics at affordable (though not cost feasible for new construction) rent levels. The subject’s immediate location has a lack of traditional suburban retail development as there are few large sites available on major arterials (excepting the subject and a full block on Farmington at SW Angel, also owned by the City of Beaverton). Most retail in Old Town is one-story storefronts, or in converted houses on less trafficked streets.

CONCLUSION Although leasing activity is still sluggish and retailers are cautious in making new commitments, inquiries from local retailers are on the increase. In spite of the slow economic recovery, Portland’s retail sector is faring well as evidenced by Portland’s no. 6 ranking among the 44 markets tracked by Marcus & Millichap.

The recent correction in rents has made Portland attractive to national retailers, as demonstrated by a number of recent large leases cited earlier. The lack of new supply in the construction pipeline should continue to help strengthen the market. In the long run, recovery will largely depend on new job creation, which, in turn, will boost consumer confidence and retail spending.

PAGE 32 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS

MULTIFAMILY MARKET ANALYSIS

METRO AREA MULTI-FAMILY OVERVIEW The Portland metropolitan apartment market continues to make steady improvements after several years of stagnant rents and high vacancies during the single-family housing boom. The single-family housing boom was fueled by historically low interest rates and lax underwriting standards, among other factors, which made owning a home a viable and attractive alternative to renting for many individuals and families.

This all changed with the bursting of the single-family housing bubble, and now while Portland’s single-family housing market continues to decline, apartment occupancy rates, rental rates, sales activity, and per-unit prices have begun to increase.

Apartment Vacancy Rates Millette & Rask, long a primary source of the multi-family occupancy and rental rate trends in the Portland metro area, stopped publishing its apartment reports in mid-2004. Starting in fall 2004, vacancy, rental and construction data in our multi-family market analyses have been based on the Metro Multi-family Housing Association’s (MMHA) Apartment Report, a bi-annual publication that has been tracking multi-family trends in the Portland metro area since the fall of 2004. The most recent publication is fall 2012 report.

The metro area overall vacancy rate peaked in 2003 at around 8.5% before steadily declining to 3.0% for the fall 2007 survey. As a direct consequence of the worsening unemployment rate and the deep recession, the overall vacancy rate steadily increased to 5.9% for the fall 2009 survey.

PAGE 33 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS As some observers had been predicting metro area vacancy rates peaking between 6.0% and 7.5% in 2010, the decline to 5.1% for the spring 2010 survey came as welcome news to apartment owners and managers. The overall vacancy rate has continued a steady decline to 3.6% for the fall 2012 survey. Reasons cited for the declining vacancy rates include reductions in job losses and signs that employment is starting to stabilize, as well as increased demand from former homeowners who have lost their homes in foreclosure and have been forced back into the rental market.

Rental Rates The table below shows the average apartment rent per square foot from fall 2001 through fall 2012.

Apartment rental rates on a per square foot basis fluctuated in a narrow band between $0.76 and $0.86 from spring 1999 to fall 2008. While this suggested no real growth in apartment rental income for a prolonged period, a substantial number of the newer and better complexes have been shifting the responsibility for paying some or all of the utilities and services to the tenants. These payments, which range from $15 to over $50 per month, are paid separately to third party billing companies who then transmit the payments to the apartment owners.

While rental rates had been flat in 2009 and 2010, property owners and managers reported that gross revenues were edging up due to reduced concessions and shorter down-times (the average number of days vacant dropped from 30 days to 19 days). By 2011, with vacancy rates at or under 4.0% and concessions half or less of what they were several years ago and negligible supply growth, owners and managers began testing market strength by raising rental rates. This proved successful, as the average rental rate increased to $0.94 per square foot for the spring 2011 survey, to $0.97 per square foot for the fall 2011 survey, to $1.00 per square foot for the spring 2012 survey, and top $1.03 per square foot, all while the vacancy rate remained well under 4.0%.

PAGE 34 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS New Multi-Family Supply The rate of apartment growth slowed during the single-family boom as residential developers shifted to townhouses and condominiums. And while the collapse of the single-family development market hit the townhouse and condominium market the hardest, development financing for apartments was almost non-existent. In 2010, 660 apartment units were added to the Portland metro area inventory, though many of these units were started before the market began to fall.

The lead-time for apartment projects, from site selection and land use approval though construction can easily take two years or more. Marcus & Millichap’s apartment market report for Portland shows 160 new apartment units added in 2011. With rents and occupancy rates approaching levels that can support new construction, we can expect to see a return to active apartment development in the near-term, especially in close-in niche markets.

METRO AREA MULTI-FAMILY SALES TRENDS CoStar Properties Apartment Sales The table below profiles sales of apartment complexes by year in the metro area from 2008 through the 3rd quarter of 2012. This data was collected and developed by CoStar Properties for the MMHA’s Apartment Report. The most recent MMHA Apartment Report is the fall 2012 report which contains CoStar data through the end of the 3rd quarter of 2012.

Portland Metro Area Multi-Family Sales Trends

2008 2009 2010 2011 2012 Q1 2012 Q2 2012 Q3 Total Sales 184 125 143 212 46 63 53 Average Sales Price $4,974,598 $3,328,647 $4,556,063 $3,919,662 $4,931,588 $2,334,409 $3,149,148 Total Square Feet 9,136,985 4,709,124 6,424,280 8,643,322 2,309,321 1,392,975 1,604,658 Total Units 10,279 5,342 7,045 9,150 2,484 1,779 1,693 Average No. of Units 56 43 49 43 54 28 32 Average Price/Unit $89,048 $60,491 $92,479 $90,816 $91,326 $82,669 $98,585 Median Price/Unit $73,548 $61,283 $60,073 $63,703 $76,563 $68,889 $71,394 Average Cap Rate 5.80% 7.04% 6.23% 6.18% 5.90% 6.03% 5.72% Average NOI/Unit $5,165 $4,259 $5,763 $5,609 $5,388 $4,985 $5,639 Average NOI as % of SGAI 53.1% 57.3% 57.2% 56.1% 48.1% 49.2% 46.7%

The median price per unit is more meaningful as an indicator of trends than the average price per unit which can be heavily influenced by just a handful of sales of large, upscale and high- end complexes. For example, the 143 sales in 2010 included three large apartment buildings which sold for more than $200,000 per unit: the 332-unit Ladd Tower in downtown Portland, the 101-unit Park 19 in Northwest Portland, the 121-unit 2121 Belmont in Close-in Southeast Portland.

After reaching $73,548 in 2008 the median per-unit price dropped down to the $61,000 range for 2009 and 2010, and then edged up to $63,703 for 2011. For the three quarters in 2012 the median per-unit price fluctuated between $68,889 and $75,563.

PAGE 35 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS The chart below shows the patterns of average and median per-unit prices from 2008 through the first quarter of 2012.

With only one exception, the average price per unit has been consistently greater than the median price per unit from 2008 through the 3rd quarter of 2012. The spread between the average price per unit and the median price was $27,191, or around 38%, in the 3rd quarter of 2012.

Similar patterns are evident in average net operating income (NOI) per unit and overall cap rates.

PAGE 36 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS

Like the average price per unit, the average NOI per unit is influenced by the particular composition of the sales in any one time period. The impact of the recession can be seen in the 2009 data as the average NOI per unit dropped to $4,259 from $5,165, and the average cap rate increased to 7.04% from 5.8%. From 2011 through the 3rd quarter of 2012 the average NOI per unit fluctuated from $4,985 to $6,094 while the average cap rate edged down from 6.23% in 2010 to 5.72% in the 3rd quarter of 2012.

Real Capital Analytics Multi-Family Sales Trends The charts below showing multi-family sales trends were developed from data obtained from Real Capital Analytics (RCA). In 2000, RCA started tracking commercial property transactions in the United States. And beginning in 2007, coverage was expanded to include all markets globally. RCA focuses primarily on the main income-producing property types: office, industrial, retail, apartment and hotel, plus sales of commercially developable land sites. RCA captures sales of properties and portfolios of $2.5 million or greater in the US, and $10 million and greater outside of the US.

The first chart shows the pattern of quarterly apartment sales volumes in the Portland metro area from January 2006 through the second quarter of 2012.

PAGE 37 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS

The chart shows both the quarterly sales volumes and rolling 12-month sales volumes in millions of dollars. Between January 2006 and April 2007 the trailing 12-month sales volumes fluctuated in the $52-million to $165-million range, and totaled $641.8-million. Over the next four quarters the quarterly sales volumes jumped to the $231-million to $422- million range. The total sales volume in the four quarters was $1.307-billion which was more than double the total sales volume for the preceding five quarters.

The apartment market collapsed in the 2nd quarter 2008, dropping to $62.4-million, before continuing to decline to a bottom of $13.7-million in the 1st quarter 2009.

The market showed a modest recovery in the 4th quarter of 2009, but quarterly sales again dropped to $5.6-million in the 1st quarter of 2010, the lowest level in five years. After dropping to $28.3-million in the 3rd quarter of 2010, quarterly sales volumes averaged $218- million over the next six quarters, totaling $1.31-billion. Although this shows strong recovery, the sales volumes for the six quarters was almost identical to the sales volumes in the four quarters between April 2007 and March 2008.

We anticipate sales volumes will continue to fluctuate in the $150-million to $300-million range in the near term.

The next RCA chart compares the trends in prices per unit in the Portland metro area with the trends in the U.S. overall.

PAGE 38 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS

After bottoming at $84,829 in the fourth quarter 2009, the average price per unit in the United States line has rather steadily edged up to $111,496 in the second quarter 2012.

MULTI-FAMILY PIPELINE Portland’s strong multi-family market has drawn a large pool of developers, from local to national, to the market. HFO, a Portland brokerage firm specializing in apartments, recently published a pipeline report of apartment units under construction, planned, and prospective. For all three categories the HFO pipeline report divides apartment units into two categories: market rate and income restricted. The HFO projection is shown below.

PAGE 39 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS There is, of course, no assurance that all the planned and prospective units will come to fruition, and many will not. The more likely scenario is that the rate of supply growth will be directly tied to the market response to the units that are under construction. If rents continue to edge up, and vacancy rates remain under 5%, then developers will continue to add units. If not, then the additions of new inventory to supply will slow.

SUBMARKET ANALYSIS –BEAVERTON/ALOHA After a metro-wide period of high vacancy, the multifamily sector has made a rapid recovery. The subject submarket has generally followed metro trends. The table below compares the subject submarket of Beaverton/Aloha with the metro area as a whole:

Metro Area Apartment Statistics by Market Area Vacancy and Average Rent/SF

Metro Area Beaverton Aloha Vac % Rent/SF Vac % Rent/SF Vac % Rent/SF Spring 06 3.9% $0.79 4.3% $0.72 4.6% $0.70 Fall 06 3.4% $0.83 2.8% $0.79 3.9% $0.85 Spring 07 3.2% $0.83 3.3% $0.73 4.0% $0.79 Fall 07 2.9% $0.85 2.3% $0.79 4.2% $0.82 Spring 08 3.3% $0.87 2.9% $0.81 3.8% $0.85 Fall 08 3.6% $0.86 2.6% $0.79 4.1% $0.82 Spring 09 5.2% $0.91 5.6% $0.83 8.5% $0.77 Fall 09 5.9% $0.91 5.1% $0.83 8.6% $0.82 Spring 10 5.1% $0.90 5.4% $0.84 8.5% $0.81 Fall 10 4.0% $0.90 3.7% $0.82 3.8% $0.87 Spring 11 3.8% $0.94 3.3% $0.89 3.1% $0.87 Fall 11 3.3% $0.97 2.6% $0.96 3.7% $0.89 Spring 12 3.7% $1.00 3.4% $0.95 3.7% $0.92 Falll 12 3.6% $1.03 3.6% $0.96 3.4% $0.95

PAGE 40 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS

Portland Metro Area Apartment Statistics Vacancy Rate Trends by Market Area 10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0% 3.6%

3.0%

Vacancy Rate 2.0%

1.0%

0.0% Spring 06 Spring 06 Fall 07 Spring 07 Fall 08 Spring 08 Fall 09 Spring 09 Fall 10 Spring 10 Fall 11 Spring 11 Fall 12 Spring 12 Fall

Metro Area Beaverton Aloha

Vacancy in the submarket remained steady between 2006 and the Fall of 2008, with vacancy spiking during the deepest points of the recession. This essentially follows changes in the Metro and National markets as well. The subject submarket has shown significant improvement over the past two years and is averaging 3.5%.

Portland Metro Area Apartment Statistics Average Monthly Rent/SF Trends by Market Area

$1.75 $1.65 $1.55 $1.45 $1.35 $1.25 $1.15 $1.05 $1.03 $0.95 $.96 $0.85

Average Monthly Average Monthly Rent/SF $0.95 $0.75 Spring 06 Spring 06 Fall 07 Spring 07 Fall 08 Spring 08 Fall 09 Spring 09 Fall 10 Spring 10 Fall 11 Spring 11 Fall 12 Spring 12 Fall

Metro Area Beaverton Aloha

PAGE 41 BLOCK 8 MULTI-FAMILY MARKET ANALYSIS Rental rates in the subject’s submarket have steadily increased since the Spring 2006, and recently hit new peaks of $0.96 per square foot in Beaverton as of Fall 2012. Rental rates have also increased in a similar trend across the metro area.

CONCLUSION Prior to the current recession, the Portland apartment market showed steady improvement due to continuing population growth and declining unemployment. Market conditions were tightening in terms of diminishing concessions, rising rental rates and declining vacancy due to reduced levels of new construction which aided in the absorption of vacant units.

Like other real estate product sectors, the multi-family market is highly sensitive to the availability and cost of financing, and increases in interest rates and decreases in loan-to- value ratios have had a commensurate depressive impact on prices.

Long-term demographics are generally favorable for apartments, as the percent of homeownership is likely to go down rather than up in the near to long term. Vacancy is very low and rent increases have been steady. New construction is in the pipeline which should moderate rent increases and stabilize vacancy over the longer term.

PAGE 42 BLOCK 8 LAND DESCRIPTION AND ANALYSIS

PROPERTY ANALYSIS

LAND DESCRIPTION AND ANALYSIS

LAND DESCRIPTION Land Area 0.90 acres; 39,204 SF Source of Land Area City of Beaverton and Washington County Primary Street Frontage Farmington - 200 feet Shape Rectangular Corner Yes Topography Generally level and at street grade Drainage No problems reported or observed Environmental Hazards None reported or observed Ground Stability No problems reported or obs erved Flood Area Panel Number 4102400506D Date February 18, 2005 Zone X Description Outside of 500-year floodplain Insurance Required? No ZONING; OTHER REGULATIONS Zoning Jurisdiction City of Beaverton Zoning Designation RC-OT Description Regional Center-Old Town District Zoning Change Likely? No Permitted Us es A dminis trative facilities , minor automotive services, commercial amusements, commercial schools, passenger rail tracks or transit stops, attached or detached dwellings, eating or drinking establishments, home occupations, hospitals, manufacturing, medical clinics, day care, office us e, recreation facilities , res earch facilities , retail us es , s ervice businesses, service stations, and warehousing up to 25% of the primary use. UTILITIES Service Provider Water City of Beaverton Sewer City of Beaverton Electricity Portland General Natural Gas NW Natural Local Phone Verizon

PAGE 43 BLOCK 8 LAND DESCRIPTION AND ANALYSIS

POTENTIAL DEVELOPMENT DENSITY The minimum FAR required is .35:1 and there is no maximum – the maximum is essentially regulated by the permitted building height of 75’ and accommodating any parking and landscape requirements. The minimum density permitted for Residential use is 12 units per acre, and the maximum is 40 units per acre.

RENT CONTROL REGULATIONS The subject is not affected by any type of regulation that would restrict the amount of rent that the owner can charge to tenants.

EASEMENTS,ENCROACHMENTS AND RESTRICTIONS We were not provided a current title report to review. We are not aware of any easements, encumbrances, or restrictions that would adversely affect value. Our valuation assumes no adverse easements, encroachments or restrictions and that the subject has a clear and marketable title.

CONCLUSION OF LAND ANALYSIS Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses including those permitted by zoning. There are no other particular restrictions on development noted in the analysis.

PAGE 44 BLOCK 8 LAND DESCRIPTION AND ANALYSIS

Looking west to east across site Looking east on 1st (Photo Taken on November 5, 2012) (Photo Taken on November 5, 2012)

Looking southwest across site Looking west along Farmington frontage (Photo Taken on November 5, 2012) (Photo Taken on November 5, 2012)

PAGE 45 BLOCK 8 LAND DESCRIPTION AND ANALYSIS

TAX MAP

Subject

PAGE 46 BLOCK 8 REAL ESTATE TAX ANALYSIS

REAL ESTATE TAX ANALYSIS State and local taxation in Oregon relies on income taxation at the state level and property taxes at the local level. The following is a summary of the Oregon property tax system.

ƒ Real estate taxes in the state and this jurisdiction represent ad valorem taxes, meaning a tax applied in proportion to assessed value.

ƒ Property taxes are collected locally to fund schools and governments in the area. The State does not receive any property tax revenue.

ƒ Property taxes are divided into school taxes and non-school taxes; non-school taxes raise revenue for City and County Governments, and educational service districts (community colleges, etc.).

ƒ In 1998, assessed value was rolled back to the 1996 real market value less 10%, and growth in assessed value was limited to 3% per year thereafter. Thus, property taxes are no longer directly tied in with real market value. There are some exceptions with respect to the 3% growth limit, such as new construction.

ƒ Property taxes may not exceed a limit of $5.00 per $1,000 of real market value for schools and $10.00 per $1,000 for non-schools

ƒ The limitation does apply to exempt bond levies that are approved by general election with at least half of the registered voters eligible to vote.

ƒ The tax year runs from July 1 through June 30, and the County Assessor's Office estimates value as of January 1 of each year. Property taxes are due and payable on November 15. A 3% discount is available if paid in full by November 15. A 2% discount is also obtainable if two-thirds of the amount is paid by this date. Another alternative is to make three equal (one-third) payments, on or before the 15th of November, February and May.

The subject is owned by the City of Beaverton and, as such, the Washington County Assessor does not carry a taxable value or taxes owing on the tax rolls. However, real estate taxes and assessments for the current tax year, as if owned by a private entity (and thus taxable), are shown in the following table. Per the County, the change ratio for like land is 1.0 and last year’s millage rate at 1.88785% of Assessed value, and this year is nearly equal.

TAXES AND ASSESSMENTS - 2012-13 Assessed Value Taxes and Assessments Ad Valorem Tax ID Land Improvements Total Tax Rate Taxes Total R125377 $319,280 $0 $319,280 1.887850% $6,028 $6,028 R125386 $100,600 $0 $100,600 1.887850% $1,899 $1,899 R125395 $211,320 $0 $211,320 1.887850% $3,989 $3,989 R125402 $62,690 $0 $62,690 1.887850% $1,183 $1,183 R125411 $55,730 $0 $55,730 1.887850% $1,052 $1,052 R125420 $55,730 $0 $55,730 1.887850% $1,052 $1,052 Total $805,350 $0 $805,350 $15,204 $15,204

Based on the concluded market value of the subject, the assessed value appears reasonable.

PAGE 47 BLOCK 8 HIGHEST AND BEST USE ANALYSIS

HIGHEST AND BEST USE ANALYSIS

AS VACANT Legally Permissible The only permitted use under zoning that is consistent with prevailing land use patterns in the area is office, retail, or multifamily residential use, or a combination thereof..

Physically Possible There are no physical limitations that would prohibit development of an office, retail or multi-family residential use, or combination thereof, on the site.

Financially Feasible Based on our analysis of the market, there is limited demand for additional office, retail, or multifamily residential development, or a combination thereof, .at the current time. It appears that a newly developed office or retail use on the site would not have a value commensurate with its cost; therefore such development is not considered to be currently financially feasible at this time. The fundamentals of the multi-family market are much better and it is possible with the correct program and proposal that multi-family residential may be cost feasible. Nevertheless, we expect an eventual recovery of the market accompanied by a rise in property values to a level that will justify the cost of new construction. Thus, it is anticipated that an office, retail, or multifamily residential development, or a combination thereof, will become financially feasible in the future.

Maximally Productive A retail use on the site would benefit from exposure to SW Farmington Road. An office use would benefit from its good overall access and linkages to SW Farmington Road and Highway 217 to the east, as well as its close proximity to a MAX light rail stop. A speculative development, however, would carry added risk as the subject's office submarket is substantially lagging behind the rest of the Metro area, which has also been the case historically. There has been some recent evidence of commercial land sales being purchased for owner-occupied office uses. A build-to-suit or pre-leased office development would be ideal, or hold the land until market conditions improve for a speculative office use to be productive.

A multifamily residential use on the site would benefit from its proximity to public transportation (MAX light rail and bus) and nearby supporting commercial uses. At the current time, apartment units available for lease have a lower level of risk involved than other allowed uses per zoning as the market fundamentals are in balance and rents are close to cost feasible levels.

PAGE 48 BLOCK 8 HIGHEST AND BEST USE ANALYSIS

CONCLUSION Holding the property for future development of a multi-family use is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as vacant.

MOST PROBABLE BUYER The most probable buyer is a developer.

PAGE 49 BLOCK 8 VALUATION METHODOLOGY

VALUATION ANALYSIS

VALUATION METHODOLOGY Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach.

The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties.

The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner-user properties.

The income capitalization approach reflects the market’s perception of a relationship between a property’s potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income-producing properties.

Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type.

The methodology employed in this assignment is summarized as follows:

APPROACHES TO VALUE Approach Applicability to Subject Use in Assignment Cos t A pproach Not A pplicable Not Utilized Sales Comparis on A pproach A pplicable Utilized Income Capitalization A pproach Not A pplicable Not Utilized

PAGE 50 BLOCK 8 SALES COMPARISON APPROACH

SALES COMPARISON APPROACH To develop an opinion of the subject’s land value, as if vacant and available to be developed to its highest and best use, we utilize the sales comparison approach. This approach develops an indication of value by researching, verifying, and analyzing sales of similar properties.

Our sales research focused on transactions most relevant to the subject in terms of location, size, highest and best use, and transaction date. Using price per square foot as the appropriate unit of comparison, we summarize the most relevant sales in the following table.

PAGE 51 BLOCK 8 SALES COMPARISON APPROACH

SUMMARY OF COMPARABLE LAND SALES

Sale Dat e; Effective SF; $/SF No. Name/Address Status Sale Price Acres Zoning Land $/ Acre 1 8341 SW Beaverton Hillsdale Hwy.- Oct-12 $300,000 20,038 Office $14.97 $652,174 8341 SW. Beaverton Hillsdale Hwy. Listing 0.46 Beaverton Washington County OR Comments: A 0.46 acre parcel zoned Office Commercial (OC) at 8341 SW Beaverton Hillsdale Highway on the north side of the street, which is listed for sale at $300,000, or $14.97 per square foot. This lot sits behind an existing coffee kiosk drive-thru and does not have any frontage along SW Beaverton Hillsdale Highway. It is accessed from a side street. The parcel has been listed for sale periodically over the last four to five years at prices between $350,000 and $500,000, and was reportedly under contract on one or two occasions, but fell through when the owner declared bankruptcy. The property has since been foreclosed on and was relisted for sale in early 2012. The listing broker indicated that there has been interest in the parcel ranging from owner-users, office developers and speculative land purchasers, but no written offers have been submitted. In September 2006 the larger parcel measuring 0.94 acre containing the coffee kiosk was purchased as land for $17.71/SF. The coffee kiosk was developed on the front portion of the site and the back portion was partitioned off. The original owner had reportedly intended to develop apartments on the back portion. 2 Chase Bank Branch Site Jul-12 $1,477,499 59,297 Communit $24.92 $1,086,396 8255-8325 SW. Beaverton Hillsdale H Closed 1.36 Beaverton Washington County OR Comments: The seller sold two parcels along Beaverton Hillsdale Highway, each measuring approximately 102 ft. by 390 ft. after the highway taking, to JP Morgan Chase Bank on July 16, 2012 for $1,477,500. As part of this sale, the buyer agreed to partition off the back portion of the lot measuring approximately 20,450 SF (204.5' by 100') and sell it back to the seller for $1. This results in a remaining land site of 59,297 SF on the front portion of the lot, which is being developed as a Chase Bank branch. The site is immediately west of a US Bank Branch, which is located on the corner of Beaverton Hillsdale Hwy. and SW Laurelwood Ave. The warranty deed notes a cross-over easement through the US Bank parking lot, which allows this site, and the newly partitioned site, to access Laurelwood Avenue. As part of the sale agreement, the back lot will have signage rights along with a shared access drive-way from the highway. Buyer paid costs related to the site partition and the removal of two existing detached homes that were being rented at the time of the sale. Seller also indicated that the back portion of the lot will be sold to a developer, who will be building an office building on the site. Seller was not at liberty to disclose the negotiated purchase price for this back lot. 3 Mixed Use Land Apr-12 $370,000 10,500 Office $35.24 $1,541,667 SW. Meade & Water Ave. Closed 0.24 Portland Multnomah County OR Comments: Seller had purchased site in 2006 for $800,000 and subsequently listed the site for $850,000. Listing broker indicated the seller was thus motivated to sell. Mult ifamily structure was constructed on site as of 10/22/12, with listing broker indicating that construction began after sale closed. 4 Canyon Rd Commercial Site Feb-11 $530,000 27,442 Commercia $19.31 $841,403 9345 SW. Canyon Rd. Closed 0.63 Portland Washington County OR Comments: This lot was sold to an adjacent used car lot. The buyer owns lot on either side of this site. It will be used for expansion. It is currently paved; however, the paving is in fair/poor condition. 5 Cedar Hills & Millikan Way Site Feb-11 $450,000 27,485 Regional $16.37 $714,286 4175-4195 SW. Cedar Hills Blvd. Closed 0.63 Beaverton Washington County OR Comments: Buyer purchased in order to develop an office building. Zoning requires that building be developed to lot line at corner. Vacant site is ready to build on. There are no atypical on-site costs, no LIDs to be paid off by the buyer, and no off-site costs. This is a raw land sale. 6 Marie Callender's Ground Lease Aug-10 $1,173,000 45,738 Commercia $25.65 $1,117,143 16261 NW. Cornell Rd. Closed 1.05 Beaverton Washington County OR Comments: Property was sold with a ground lease that expired 5/1/2014 plus two 5-year options. In 2010, when the sale occurred, the ground lease had been reduced to $79,200 through 12/31/10. Lease returned to contract rate of $91,249 as of 1/1/2011. Lease was set to increase to $94,899 as of 5/1/11; to $98,695 as of 5/1/13. Marie Callender's restaurant closed abruptly around 5/1/11. Landlord has since leased out the building to a new restaurant tenant. Buyer said he based sale price on the land value but with bonus of the ground lease in place. He said he anticipated worse case scenario being that he would have a good site with a building on it if the tenant vacated. 7 Beaverton School District Parking Jul-10 $215,750 4,791 $45.03 $1,961,364 12855 SW. 2nd St. Closed 0.11 Beaverton Washington County OR

PAGE 52 BLOCK 8 SALES COMPARISON APPROACH

COMPARABLE LAND SALES MAP

PAGE 53 BLOCK 8 SALES COMPARISON APPROACH

ANALYSIS AND ADJUSTMENT OF SALES

The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below.

Adjustment Factor Accounts For Comments Effective Sale Price Atypical economics of a No adjustments were necessary. transaction, such as demolition cost or expenditures by buyer at time of purchase. Real Property Rights Fee simple, leased fee, leasehold, No adjustments were necessary. partial interest, etc. Financing Terms Seller financing, or assumption of All sales sold for cash or were existing financing, at non-market cash equivalent and, as such, no terms. financing adjustments were made. Conditions of Sale Extraordinary motivation of buyer All sales were arms length. or seller, assemblage, forced sale. However, Sale No. 7 was purchased by the Beaverton School District. This is essentially an assemblage with a high motivation to acquire the site above market norms. Market Conditions Changes in the economic All of the sales are relatively environment over time that affect recent, having occurred over the the appreciation and depreciation of past 24 months, with 3 of the 7 real estate. having occurred over the past 6 months. There has been strengthening in land values over the past two years, and small adjustments were made to account for this difference. Location Market or submarket area Comparable No. 3 is located in influences on sale price; the close-in west side urbanized surrounding land use influences. core of Portland, and overall land values are greater and a downward adjustment was made. A downward adjustment was also made to Comparable No. 6 due to its proximity to the Cornell Road/Hwy 26 interchange, and better quality of surrounding land uses.

PAGE 54 BLOCK 8 SALES COMPARISON APPROACH

Adjustment Factor Accounts For Comments Access/Exposure Convenience to transportation A strong upward adjustment was facilities; ease of site access; made to this comparable as it is visibility; traffic counts. located in the rear of a deep improved site, and does not benefit from direct exposure and access to the Beaverton-Hillsdale Highway. All other sales have similar access to the subject and no adjustments were made. Size Inverse relationship that often Appropriate adjustments were exists between parcel size and unit made to account for the value. differences in size. Shape and Primary physical factors that affect No adjustments were necessary. Topography the utility of a site for its highest and best use. Zoning Government regulations that affect Appropriate adjustments were the types and intensities of uses made to account for the allowable on a site. differences in zoning..

PAGE 55 BLOCK 8 SALES COMPARISON APPROACH The following table summarizes the adjustments we make to each sale.

LAND SALES ADJUSTMENT GRID Subject Comparable 1 Comparable 2 Comparable 3 Comparable 4 Comparable 5 Comparable 6 Comparable 7 Name Block 8 8341 SW Chas e Bank Mixed Use Land Canyon Rd Cedar Hills & Marie Beaverton Beaverton Branch Site Commercial Site Millikan Way Callender's School District Hillsdale Hwy.- Site Ground Lease Parking Lot Lis ting Address Full block 8341 SW. 8255-8325 SW. SW. Meade & 9345 SW. 4175-4195 SW. 16261 NW. 12855 SW. 2nd bounded by SW Beaverton Beaverton Water Ave. Canyon Rd. Cedar Hills Blvd. Cornell Rd. St. Farmington Hillsdale Hwy. Hillsdale Hwy. Road on the north; Main and Angel on the west and east, respectively; and, SW First Avenue on the south. City Beaverton Beaverton Beaverton Portland Portland Beaverton Beaverton Beaverton County Washington Washington Washington Multnomah Washington Washington Washington Washington State OregonOROROROROROROR Sale Date Oct-12 Jul-12 Apr-12 Feb-11 Feb-11 Aug-10 Jul-10 Sale Status Listing Closed Closed Closed Closed Closed Closed Sale Price $300,000 $1,477,500 $370,000 $530,000 $450,000 $1,173,000 $215,750 Price Adjustment Description of Adjustment Effective Sale Price $300,000 $1,477,499 $370,000 $530,000 $450,000 $1,173,000 $215,750 Square Feet 39,204 20,038 59,297 10,500 27,442 27,485 45,738 4,791 Acres 0.900.461.360.240.630.631.050.11 Price per Square Foot $14.97 $24.92 $35.24 $19.31 $16.37 $25.65 $45.03 PROPERTY RIGHTS Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Leased Fee Fee Simple % ADJUSTMENT 0% 0% 0% 0% 0% 0% 0% FINANCING TERMS Cash to seller btained financing0,000 for one year. Cash to seller Cash to seller % ADJUSTMENT 0% 0% 0% 0% 0% 0% 0% CONDITIONS OF SALE % ADJUSTMENT -20% 0% 0% 0% 0% 0% -25% MARKET CONDITIONS 11/5/2012 Oct-12 Jul-12 Apr-12 Feb-11 Feb-11 Aug-10 Jul-10 0% 0% 0% 3% 3% 5% 5% CUMULATIVE ADJUSTED PRICE $11.98 $24.92 $35.24 $19.80 $16.78 $26.93 $35.46 LOCATION Similar Similar Superior Similar Similar Superior Similar % ADJUSTMENT 0% 0% -10% 0% 0% -10% 0% ACCESS/EXPOSURE Inferior Similar Similar Similar Similar Similar Superior % ADJUSTMENT 25%0%0%0%0%0%-10% SIZE Superior Inferior Superior Similar Similar Inferior Superior % ADJUSTMENT -5% 5% -10% 0% 0% 5% -15% SHAPE AND TOPOGRAPHY Similar Similar Similar Similar Similar Similar Similar % ADJUSTMENT 0% 0% 0% 0% 0% 0% 0% ZONING Inferior Superior Similar Superior Inferior Superior Similar % ADJUSTMENT 10% -5% 0% -10% 5% -5% 0% Net $ Adjustment $3.59 $0.00 -$7.05 -$1.98 $0.84 -$2.69 -$8.87 Net % Adjustment 30% 0% -20% -10% 5% -10% -25% Final Adjusted Price $15.57 $24.92 $28.19 $17.82 $17.62 $24.24 $26.60 Overall Adjustment 4% 0% -20% -8% 8% -6% -41% Range of Adjusted Prices $15.57 - $28.19 Average $22.14 Indicated Value $22.00

PAGE 56 BLOCK 8 SALES COMPARISON APPROACH

LAND VALUE CONCLUSION Not one particular comparable sale stands out as the best comparable. All sales bracket the general characteristics of the subject.

Comparable No. 1 is a listing in a much inferior location, with poor exposure and access characteristics. Sale 7 is the assemblage of a much smaller site by a motivated buyer. These two sales frame the lowest and highest adjusted indicators of value and are outliers relative to the other comparable data.

Excluding these two comparables narrows the range between $17 and $28 per square foot, with an average of $22.00. In the final analysis, a value of $22 per square foot has been estimated for the subject.

LAND VALUE CONCLUSION

Indicated Value per Square Foot $22.00 Subject Square Feet 39,204 Indicated Value $862,488 Rounded $860,000

PAGE 57 BLOCK 8 LEASED FEE AND LEASEHOLD VALUE ESTIMATES

LAND VALUATION –LEASED FEE AND LEASEHOLD ESTIMATES Per the request of the client, we also estimate the leased fee and leasehold values of the subject, as encumbered by a Lease Option signed and effective March 23, 2012.

The methodology utilized in estimating the market value of these two interests is based on the following general appraisal theory:

Fee Simple Value = Leased Fee Value + Leasehold Value; or, Leasehold Value = Fee Simple Value – Leased Fee Value; or, Leased Fee Value = Fee Simple Value – Leasehold Value.

The fee simple value was previously estimated at $860,000.

In this analysis, leased fee value (i.e. the position of the City of Beaverton) has been estimated first, and then the Leased Fee Value will be deducted from the Fee Simple estimate to estimate the value of the Leasehold accruing to the lessee, Community Partners for Affordable Housing.

The lease terms as summarized as follows: UNITED STATES CPI -Lessor: City of Beaverton 1982-84 = 100 Year CPI Change % Change -Lessee: Community Partners for Affordable Housing 1982 96.5 -Option Term: 24 months, expiring April 1, 2014 1983 99.6 3.1 3.2% -Expense Basis: Triple Net 1984 103.9 4.3 4.3% -Rent: $10 upon signing of Lease Option 1985 107.6 3.7 3.6% -Lease Commencement: April 1, 2014 1986 109.6 2 1.9% 1987 113.6 4 3.6% -Lease Term: 75 years 1988 118.3 4.7 4.1% -Expense Basis: Triple Net 1989 124 5.7 4.8% -Annual Rent: $20 1990 130.7 6.7 5.4% -Reversion: Improvements and site revert to the fee 1991 136.2 5.5 4.2% 1992 140.3 4.1 3.0% owner of the site upon lease termination 1993 144.5 4.2 3.0% 1994 148.2 3.7 2.6% The estimate leased fee value is the sum of the present 1995 152.4 4.2 2.8% value of the lease payments over time, and the present 1996 156.9 4.5 3.0% value of the site at the expiration of the lease. Any 1997 160.5 3.6 2.3% 1998 163 2.5 1.6% improvements on the site at the time of lease termination 1999 166.6 3.6 2.2% will be 75 years old, will be functionally obsolete and 2000 172.2 5.6 3.4% most likely not the highest and best use of the site at that 2001 177.1 4.9 2.8% time. As such, the improvements are not estimated to 2002 179.9 2.8 1.6% 2003 184 4.1 2.3% have any contributory value at the time the lease ends – 2004 188.9 4.9 2.7% at that point in time, the value will be in the site. 2005 195.3 6.4 3.4% 2006 201.6 6.3 3.2% Land Price Appreciation 2007 207.342 5.742 2.8% 2008 215.303 7.961 3.8% Calculating the present value of the leased fee interest in 2009 214.537 -0.766 -0.4% the subject also includes calculation of the projected 2010 218.056 3.519 1.6% reversion of the property at the end of the lease. As 2011 224.939 6.883 3.2% previously noted, we believe the value of the reversion Average 3.0%

PAGE 58 BLOCK 8 LEASED FEE AND LEASEHOLD VALUE ESTIMATES will be in the land for redevelopment. In keeping with general investment theory and in an effort to mirror the projections of brokers and investors in the market, the annual CPI escalation will be used as a proxy for land price escalation. We anticipate an average annual change in the CPI of 3%, in keeping with the last three decades.

Discount Rate Finally, the rental income and projected reversion must be discounted to present dollars in order to reflect the as is value of the leasehold interest. In determining the appropriate discount rate we have used indications from RealtyRates.com as well as the Price Waterhouse Cooper (PwC) survey and Integra Realty Resources’ Viewpoint survey.

As published by RealtyRates.com in the 3rd Quarter 2012 Investor Survey, the following table summarizes prevailing land lease capitalization and discount rates. The former reflect initial rates of return on appraised values for vacant land proposed for development. The latter are internal rates of return being achieved by landowners on improved properties.

The RealtyRates survey indicates discount rates ranging from a low of 4.87% for office land up to a high of 11.87% for retail land. The average indication for office properties from the survey was 7.69%, and the average for retail was 7.33%, both of those indications are below the overall average of 8.1%, indicating that office and retail land leases are considered to have less risk than land leases overall, which include special purpose properties. Based on the RealtyRates survey, a discount rate of 7.5% appears appropriate.

PAGE 59 BLOCK 8 LEASED FEE AND LEASEHOLD VALUE ESTIMATES Discount Rate Conclusion Considering the characteristics of the subject’s lease and the redevelopment potential of the underlying site, a discount rate slightly above the RealtyRates survey is appropriate. Taking the above into account, we conclude a discount rate of 8% is appropriate for the subject.

As a check on the reasonableness of this conclusion, we also take into account that real-estate discount rates are, generally, a long-term investment safe-rate plus a real-estate market risk premium. As of October 22, 2012, long-term US government debt, 30 year treasury bonds (most often used as the safe-rate indication), were yielding 2.95%. The implication of an 8% discount rate is that the additional risk from volatility of the real-estate market and credit risk from the lessee increases the required yield by approximately 5% above the safe-rate. That is a reasonable risk premium and further indication that the discount rate conclusion is appropriate.

LEASED FEE VALUE CONCLUSION Using the previously concluded growth and discount assumptions and the subject’s actual lease terms indicates a present value of the leased fee interest in the subject as calculated on the following page.

The term of analysis includes the first two option years and the retrospective value estimate, as of the date of the lease/option signing on March 23, 2012, is estimated to be $11,000.

LEASEHOLD VALUE ESTIMATE

Per the formulations set forth at the beginning of this section, the leasehold value is the difference between the Fee Simple and Leased Fee Value estimates. These two values were estimated at $860,000 and $11,000 respectively, resulting in a leasehold value estimate for the subject of $849,000

PAGE 60 BLOCK 8 LEASED FEE AND LEASEHOLD VALUE ESTIMATES

RECONCILIATION AND CONCLUSION OF VALUE As discussed previously, we use only the sales comparison approach in developing an opinion of value for the subject. The cost and income approaches are not applicable, and are not used.

Based on the preceding valuation analysis and subject to the definitions, assumptions, and limiting conditions expressed in the report, our value opinion follows:

VALUE CONCLUSIONS Appraisal Premise Interest Appraised Date of Value Value Conclusion M arket Value Fee Simple November 5, 2012 $860,000 M arket Value Leased Fee March 23, 2012 $11,000 M arket Value Leasehold March 23, 2012 $849,000

EXPOSURE AND MARKETING TIMES Our estimates of exposure and marketing times are as follows:

EXPOSURE TIME AND MARKETING PERIOD Exposure Time (Months) <=12 M arketing Period (M onths) <=12

PAGE 61 BLOCK 8 CERTIFICATION

CERTIFICATION

We certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have performed no other services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. 5. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal practice as well as applicable state appraisal regulations. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10.The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11.Donald L. Singer, MAI, CRE, FRICS made a personal inspection of the property that is the subject of this report. 12.No one provided significant real property appraisal assistance to the person(s) signing this certification. OR…Significant real property appraisal assistance was provided by and who have not signed this certification. 13.We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP. 14.As of the date of this report, Donald L. Singer, MAI, CRE, FRICS, has completed the continuing education program of the Appraisal Institute.

PAGE 62 BLOCK 8 CERTIFICATION 15.As of the date of this report, Donald L. Singer, MAI, CRE, FRICS, has completed the Standards and Ethics Education Requirement of the Appraisal Institute for associate members.

Donald L. Singer, MAI, CRE, FRICS Certified General Real Estate Appraiser OR Certificate # C000055

PAGE 63 BLOCK 8 ASSUMPTIONS AND LIMITING CONDITIONS

ASSUMPTIONS AND LIMITING CONDITIONS

This appraisal is based on the following assumptions, except as otherwise noted in the report.

1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal is subject to the following limiting conditions, except as otherwise noted in the report.

1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct.

PAGE 64 BLOCK 8 ASSUMPTIONS AND LIMITING CONDITIONS 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability, and civil, mechanical, electrical, structural and other engineering and environmental matters. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10.Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the person signing the report. 11.Information, estimates and opinions contained in the report and obtained from third- party sources are assumed to be reliable and have not been independently verified. 12.Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13.If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14.No consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15.The current purchasing power of the dollar is the basis for the value stated in our appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16.The value found herein is subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17.The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual

PAGE 65 BLOCK 8 ASSUMPTIONS AND LIMITING CONDITIONS results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18.The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner’s financial ability with the cost to cure the non-conforming physical characteristics of a property, a specific study of both the owner’s financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19.The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20.No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property and the person signing the report shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21.The person signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non-existent or minimal. 22.Integra Realty Resources – Portland is not a building or environmental inspector. Integra Portland does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23.The appraisal report and value conclusion for an appraisal assumes the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24.It is expressly acknowledged that in any action which may be brought against Integra Realty Resources – Portland, Integra Realty Resources, Inc. or their respective officers, owners, managers, directors, agents, subcontractors or employees (the “Integra Parties”), arising out of, relating to, or in any way pertaining to this engagement, the appraisal reports, or any estimates or information contained therein, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with

PAGE 66 BLOCK 8 ASSUMPTIONS AND LIMITING CONDITIONS gross negligence. It is further acknowledged that the collective liability of the Integra Parties in any such action shall not exceed the fees paid for the preparation of the appraisal report unless the appraisal was fraudulent or prepared with gross negligence. Finally, it is acknowledged that the fees charged herein are in reliance upon the foregoing limitations of liability. 25.Integra Realty Resources – Portland, an independently owned and operated company, has prepared the appraisal for the specific purpose stated elsewhere in the report. The intended use of the appraisal is stated in the General Information section of the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client’s use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable. 26.The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer-seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. Integra Realty Resources, Inc. and the undersigned are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27.All prospective value estimates presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future.

PAGE 67 ADDENDUM A APPRAISER QUALIFICATIONS Professional Qualifications

DldLSiMAICRE Donald L. Singer, MAI, CRE, FRICS Experience Principal of Integra Realty Resources of Portland, Oregon. Actively engaged in real estate valuation and consulting since 1980. Additional background includes twenty years developing and actively managing a multi-property real estate portfolio. Valuations have been performed on various properties including, but not limited to, neighborhood and specialty shopping centers, apartment complexes, single and multi-tenant industrial buildings, low to high rise office buildings, mixed used facilities, and vacant land for different uses. Particular strengths include neighborhood and community shopping centers, Class A, B & C office (primarily CBD), business parks, industrial complexes, and re-use of industrial and commercial properties. Special-purpose property types include high-bay manufacturing as well as high tech plants (chip plants), truck terminals, truck stops, and specialty medical clinics. Clients served include accountants, investment firms, law firms, lenders, private and public agencies, and bank trust departments. Valuations have been performed for estates, financing, equity participation and due diligence support. Valuations and market studies have been done on proposed, partially completed, renovated and existing structures.

Professional Activities & Affiliations Appraisal Institute, Member (MAI), July 1986 Counselor of Real Estate (CRE) Counselors of Real Estate, April 2005 Royal Institute of Chartered Surveyors, Fellow (FRICS) RICS, January 2008 Other: Portland Business Alliance, January 2004 Licenses Oregon, Certified General, C000055, Expires September 2014 Washington, Certified General, 1101703, Expires September 2013

Education B.A. Degree, History, Occidental College (1976) Master of Business Administration, University of Oregon, (1979)

Successfully completed numerous real estate related courses and seminars sponsored by the Appraisal Institute, accredited universities and others.

Currently certified by the Appraisal Institute’s voluntary program of continuing education for its designated members.

Qualified Before Courts & Administrative Bodies Circuit Court, State of Oregon (Multnomah County)

[email protected] Ɣ 503-478-1005 Integra Realty Resources - Portland

Copyright 2012 Integra Realty Resources, Inc. INTEGRA REALTY RESOURCES,INC. CORPORATE PROFILE

Integra Realty Resources, Inc. offers the most comprehensive property valuation and counseling coverage in the United States with 59 independently owned and operated offices in 33 states. Integra was created for the purpose of combining the intimate knowledge of well-established local firms with the powerful resources and capabilities of a national company. Integra offers integrated technology, national data and information systems, as well as standardized valuation models and report formats for ease of client review and analysis. Integra’s local offices have an average of 25 years of service in the local market, and each is headed by a Managing Director who is an MAI member of the Appraisal Institute.

A listing of IRR’s local offices and their Managing Directors follows:

ATLANTA, GA - Sherry L. Watkins., MAI, MRICS NAPLES, FL - Carlton J. Lloyd, MAI AUSTIN, TX - Randy A. Williams, MAI, SR/WA, FRICS NASHVILLE, TN - R. Paul Perutelli, MAI, SRA, MRICS BALTIMORE, MD - G. Edward Kerr, MAI, MRICS NEW JERSEY COASTAL - Anthony Graziano, MAI, CRE, FRICS BOISE, ID - Bradford T. Knipe, MAI, ARA, CCIM, CRE, FRICS NEW JERSEY NORTHERN - Barry J. Krauser, MAI, CRE, FRICS BOSTON, MA - David L. Cary, MAI, MRICS NEW YORK, NY - Raymond T. Cirz, MAI, CRE, FRICS CHARLOTTE, NC - Fitzhugh L. Stout, MAI, CRE, FRICS ORANGE COUNTY, CA - Larry D. Webb, MAI, FRICS CHICAGO, IL - Gary K. DeClark, MAI, CRE, FRICS ORLANDO, FL - Charles J. Lentz, MAI, MRICS CHICAGO, IL - Eric L. Enloe, MAI, MRICS PHILADELPHIA, PA - Joseph Pasquarella, MAI, CRE, FRICS CINCINNATI, OH - Gary S. Wright, MAI, SRA, FRICS PHOENIX, AZ - Walter Winius, Jr., MAI, CRE, FRICS CLEVELAND, OH - Douglas P. Sloan, MAI PITTSBURGH, PA - Paul D. Griffith, MAI, MRICS COLUMBIA, SC - Michael B. Dodds, MAI, CCIM, MRICS PORTLAND, OR - Brian A. Glanville, MAI, CRE, FRICS COLUMBUS, OH - Bruce A. Daubner, MAI, FRICS PROVIDENCE, RI - Gerard H. McDonough, MAI DALLAS, TX - Mark R. Lamb, MAI, CPA, MRICS RALEIGH, NC - Chris R. Morris, MAI, MRICS DAYTON, OH - Gary S. Wright, MAI, SRA, FRICS RICHMOND, VA - Kenneth L. Brown, MAI, CCIM, MRICS DENVER, CO - Brad A. Weiman, MAI, MRICS SACRAMENTO, CA - Scott Beebe, MAI, FRICS DETROIT, MI - Anthony Sanna, MAI, CRE, FRICS ST. LOUIS, MO - Kenneth Jaggers, MAI, FRICS FORT WORTH, TX - Donald J. Sherwood, MAI, SR/WA, FRICS SALT LAKE CITY, UT - Darrin Liddell, MAI, CCIM, MRICS GREENVILLE, SC - Michael B. Dodds, MAI, CCIM, MRICS SAN ANTONIO, TX - Martyn C. Glen, MAI, CRE, FRICS HARTFORD, CT - Mark F. Bates, MAI, CRE, FRICS SAN DIEGO, CA - Jeff Greenwald, MAI, SRA, FRICS HOUSTON, TX - David R. Dominy, MAI, CRE, FRICS SAN FRANCISCO, CA - Jan Kleczewski, MAI, FRICS INDIANAPOLIS, IN - Michael C. Lady, MAI, SRA, CCIM, MRICS SARASOTA, FL - Carlton J. Lloyd, MAI KANSAS CITY, MO/KS - Kenneth Jaggers, MAI, FRICS SARASOTA, FL- Craig L. Smith, MAI, MRICS LAS VEGAS, NV - Shelli L. Lowe, MAI, SRA, MRICS SAVANNAH, GA - J. Carl Schultz, Jr., MAI, SRA, CRE, FRICS LOS ANGELES, CA - John G. Ellis, MAI, CRE, FRICS SEATTLE, WA - Allen N. Safer, MAI, MRICS LOS ANGELES, CA - Matthew J. Swanson, MAI SYRACUSE, NY - William J. Kimball, MAI, FRICS LOUISVILLE, KY - George M. Chapman, MAI, SRA, CRE, FRICS TAMPA, FL - Bradford L. Johnson, MAI, MRICS MEMPHIS, TN - J. Walter Allen, MAI, MRICS TULSA, OK - Robert E. Gray, MAI, FRICS MIAMI/PALM BEACH, FL - Scott M. Powell, MAI WASHINGTON, DC - Patrick C. Kerr, MAI, SRA, FRICS MILWAUKEE, WI - Gary K. DeClark, MAI, CRE, FRICS WILMINGTON, DE - Douglas L. Nickel, MAI, FRICS MINNEAPOLIS, MN - Michael Amundson, MAI, CCIM, MRICS IRR de MEXICO - Oscar J. Franck Terrazas, MRICS

Corporate Office 1133 Avenue of the Americas, 27th Floor, New York, New York 10036 Telephone: (212) 255-7858; Fax: (646) 424-1869; E-mail [email protected] Website: www.irr.com